CVS Group

Consolidating the fragmented UK veterinary market, CVS has delivered resilient, record half-year results despite downturn and a dramatic cold snap.

CVS, focused on the small animal market and with its acquisition model driven by demographic changes in the veterinary profession, buys vet practices and then manages them more efficiently by centralising their administration and utilising its considerable buying clout.

For the six months to December, Diss-based CVS, with 170 veterinary surgeries, 5 laboratories and a pet crematorium, grew sales more than 11% to £41.5m and pre-tax profits more than 50% to £2.81m. Earnings were increased from 5.2p to 7.2p per share, growth not far off 40%.

During a half in which a further two surgeries were acquired, margins improved from 16.3% to 17.2%, as efficiencies worked their way through the expanding surgery network and CVS achieved a near-19% increase in cash generated from operations to £6.64m. The results were particularly strong given December's adverse weather, with like-for-like sales growing by a creditable 0.5%.

Alongside the results, CVS said it had raised £9m at 190p to help fund its latest deal, the highly significant, £12.2m cash acquisition of Veterinary Enterprises & Trading (VET), a deal bringing the 27-surgeries strong Pet Doctors chain in the South East with it. Set to enhance earnings in year-one, once the VET takeover completes, CVS will boast 197 veterinary surgeries and its share of the small animal market will increase from 7% to 8%.

CVS, forecast to grow profits from £8.3m to £10.6m in the current year to June, continues to offer investors exciting acquisitive and organic growth in a defensive market and the shares, enthusiastically backed here at 185p last month, remain in strong buy territory.