Shares in CVS Group (LON: CVSG), the veterinary services group, fell almost 5% today after full-year results showed higher adjusted profits but a sharp decline in statutory earnings and rising debt.
The stock was among the session’s weaker performers on the London Stock Exchange’s Main Market.
CVS shares traded at 1,238p in early trade today, down 4.9% from yesterday’s close of 1,302p, having fallen as low as 1,224p after opening at 1,299p.
CVS said revenue for the year to the 30th of June rose 5.9% to £712.8m, with adjusted EBITDA, earnings before interest, tax, depreciation and amortisation, up 5.1% to £141.5m. Adjusted earnings per share climbed 6.9% to 85.6p. The company said its Australian business, now spanning 57 practice sites against 43 a year earlier, grew revenue to £79.1m from £52.1m and now makes up around 11% of group revenue. It also confirmed that the Competition and Markets Authority’s investigation into the veterinary market had concluded, with a final remedies order published on Tuesday.
Statutory profit before tax fell 1.8% to £32.0m, from £32.6m a year earlier. Basic earnings per share collapsed 66.9% to 24.4p, though the prior year’s figure of 73.7p had been lifted by a £33.9m disposal gain; stripping that out, continuing-operations basic earnings per share was 26.3p a year earlier. Net bank borrowings rose to £199.6m from £131.4m, pushing leverage up to 1.63 times earnings from 1.18 times, still within the group’s own 2.0 times ceiling. UK like-for-like sales growth improved to 2.1% from 0.2%.
Chief executive Richard Fairman struck a confident tone despite the share price reaction.
Whilst the macro-economic backdrop remains challenging, we are confident in the essential nature of the services we provide and our ability to drive increased returns for all stakeholders. With the CMA investigation concluded, we can now focus all our attention on delivering great Care, Value and Service to our clients and their animals. CVS is in a strong position to deliver growth over the long-term.
Richard Fairman, CVS Group
The board raised its final dividend to 9.0p from 8.5p, payable on the 4th of December, and continued its £50m share buyback programme, of which £11.7m had been completed by the year end. CVS said it expects to perform in line with market expectations for the coming year, against a company-compiled consensus of 11 analysts pointing to adjusted EBITDA of £150.4m and adjusted earnings per share of 94.9p.