CVS Group final results in line after increased acquisitions

24th Sep 2013 07:46

Revenues and profits cantered higher at veterinary services group CVS as it increased the pace of its acquisitions to 14 surgeries in the year, from eight the year before against the backdrop of more favourable market conditions.Revenues reared up 10% to £120.1m in the year to end-June, with like-for-like sales up 3.4%.Higher acquisition and amortisation costs dragged operating profits down 1% to £6.7m, but, excluding these, underlying earnings before interest, tax, depreciation and amortisation were up 5.5% to £16.5m. A new £10m borrowing facility provides greater capacity to for acquisitions, but management stressed was a level that will not put undue pressure on the balance sheet.CVS has a full pipeline of potential purchases, it said: "We have seen an increase in the number of vets wanting to sell their practices and the additional borrowing will allow us to take advantage of these opportunities."The AIM company, which also acquired its second pet crematorium during the period, increased cash generated from operations to £16.7m from £15.6m.Development of its first own-brand products under the name of 'MiPet' began, with a first two products, a gut protective and a joint supplement, were launched subsequent to the year end. Adjusted earnings per share grew by 7% to 16.9p and a dividend increase of 33% to 2p per share was proposed. Chairman Richard Connell said: "The outlook for CVS is promising with some tentative signs of a return to more favourable market conditions. The initiatives we progressed in 2013 will serve us well in the current financial year, leading to further growth in all divisions."He added: "The board remains cautiously optimistic about the Group's future and estimates that CVS only has an 11% share of the UK small animal veterinary market. "This demonstrates the major opportunity for further growth and consolidation and we expect to make further practice acquisitions."Broker Singer+N1 said results demonstrated good underlying momentum across the key value drivers. Clean profits growth of 8%, strong cash generation and a 60 basis points uplift on return on capital employed was "evidence of a company firmly moving in the right direction". Analyst Sahill Shan said a price-earnings rating equivalent to the Consumer or Retail sector on circa 16 times earnings would imply fair value of 270p on the shares.Shares in CVS were down 2.4% at 237.5p in early trading on Tuesday.OH