A staggering 42 acquisitions explains why first-half revenue at veterinary group CVS (CVSG) grew by more than a fifth but profits sank. Turnover exceeded £100m for the first time, but the slew of deals sent net debt up by 84 per cent to £84.8m. Meanwhile, general finance costs almost doubled and amortisation costs rose by £1.7m. That said, analysts reckon the underlying business is going great guns, with like-for-like sales up 3 per cent against tough comparative numbers.
Two more deals - including eight more surgeries - have been signed post-period end, but bosses reckon underlying sales momentum has also improved into 2016. Easier comparative figures should also mean the group achieves market expectations come the end of the year. In the first half, the main practice division (which operates 333 veterinary surgeries across the UK) grew revenue by more than a quarter to £90.4m - up 3 per cent on an underlying basis - and margins by 20 basis points to 83.8 per cent. Membership of the Healthy Pet Club scheme also grew 12 per cent over the six-month period.
Analysts at N+1 Singer expect pre-tax profit of £23.3m this year, giving EPS of 30p, compared with £18.2m and 24p in 2015.
| CVS (CVSG) | ||||
|---|---|---|---|---|
| ORD PRICE: | 752p | MARKET VALUE: | £451m | |
| TOUCH: | 751-752p | 12-MONTH HIGH: | 840p | LOW: 499p |
| DIVIDEND YIELD: | 0.4% | PE RATIO: | 74 | |
| NET ASSET VALUE: | 69p* | NET DEBT: | 204% | |
| Half-year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2014 | 81.9 | 5.2 | 7.0 | 0.0 |
| 2015 | 101 | 4.3 | 5.6 | 0.0 |
| % change | +23 | -17 | -20 | - |
*Includes intangible assets of £118m, or 197p a share | ||||
