CVS Group (CVS), Pets at Home (PETS), FirstGroup (FGP), Persimmon (PSN), Synthomer (SYNT), Regional Reit (RGL), Hill & Smith (HILS), TP ICAP (TCAP), Target Healthcare Reit (THRL) and TI Fluid Systems (TIFS)
The Competition and Markets Authority (CMA) has launched a formal investigation into the UK’s veterinary sector following an initial review of its pricing practices. The regulator can now intervene directly in the market via the imposition of maximum prescription fees and ordering the sale of a business or assets. It also has the power to compel those under investigation to provide information to consumers.
Shares in listed vet chain CVS Group (CVS) fell by around 20 per cent following the announcement, while Pets at Home (PETS) was down by a more modest 3 per cent by mid-morning. The latter also has a retail business – which may explain its stock’s relative strength – along with some 450 veterinary practices across the country.
Since 2013, about 1,500 of the UK’s 5,000 total practices have been acquired by the “big six” corporate operators: CVS, IVC, Linnaeus, Medivet, Pets at Home and VetPartners. The CMA is also concerned that this level of consolidation has weakened competition in the sector. JJ
Read more: Zoetis: A global leader in veterinary medicine
FirstGroup boosts guidance after rail rebound
FirstGroup (FGP) has said its full year results will be “slightly ahead” of expectations, following a strong performance from its rail division. Demand for its 'open access’ services – which shoulder full commercial risk – was particularly high. The transport operator is now looking to grow this business, and has applied to run a new service between London and Sheffield. JS
Read more: The railways are a mess – why is FirstGroup thriving?
Synthomer’s self-help programme boosts shares
Chemicals group Synthomer (SYNT) is up 25 per cent today after it announced improvements in its debt burden in its annual results. The business has been grappling with a number of operational problems in the past few years, including falling post-pandemic demand for nitrile latex and industry-wide destocking.
However, it halved net debt to £500mn across FY23 via a rights issue, divestment proceeds and stronger cash generation. Revenue was nonetheless down by almost 16 per cent year-on-year, while Ebitda fell 44 per cent to £142mn.
“In the medium term, we remain confident that Synthomer's earnings power is more than double recent levels,” said chief executive Michael Willome. JJ
Read why we’re bullish on Synthomer
Hill & Smith gets bigger in America
Hill & Smith (HILS) reported a 13 per cent increase in revenue to £830mn and a 34 per cent jump in pre-tax profit to £93.2mn for 2023, helped by volume growth and some recent acquisitions.
Organic revenue growth of 5 per cent was slightly below expectations given growth of 8 per cent over the first 10 months, but reported profit was higher, Shore Capital analysts said.
The company spent £48mn on “margin accretive” acquisitions last year and has already spent £11.6mn on two US deals so far this year, buying Capital Steel Service for £5mn in January and FM Stainless this month for £6.6mn.
Hill & Smith’s increased presence in the US means the country now generates more than three quarters of its underlying operating profit. An upbeat outlook statement based on a faster-growing US market and a “strong” M&A pipeline pushed the company’s shares up by 3 per cent. MF
Target Healthcare's dividend drops as rent flattens
Target Healthcare Reit's (THRL) interim dividend dropped 16.3 per cent after the elderly care landlord's revenue flatlined in its results for the six months to 31 December. The £34mn in IFRS sales was the same as last year as EPRA earnings per share (EPS), which focuses on rental income and ignores valuation movements, dropped to 3.78p to 3.89p, fully covering the dividend, which fell to 2.83p from 3.38p last year.
The Reit's rental contracts are inflation-linked, with a minimum 2 per cent and maximum 4 per cent annual increase. The Reit told Investors' Chronicle that adjusted EPRA EPS had increased 1.3 per cent, but admitted that a lack of acquisitions in the portfolio due to higher interest rates and rising financing costs had hit earnings. ML
