For
immediate
release
21 May 2024
CVS Group
plc
("CVS" or the
"Company" and, together with its subsidiaries, the
"Group")
Disposal of non-core
operations
CVS, the UK listed veterinary group
and a leading provider of veterinary services announces the
disposal of its non-core operations in the Netherlands and the
Republic of Ireland.
Rationale for and terms of the disposals
In light of the Group's significant
investment opportunities in Australia and through capital
expenditure in its existing UK operations, CVS has reviewed its
Netherlands and Republic of Ireland ("ROI") operations given their
sub-scale nature and the particular challenges within these
veterinary markets. As a result, the Group has taken the
decision to divest its operations in these markets. The Group
has exchanged contracts for the disposal of the Netherlands and ROI
subsidiaries to Global Veterinary Excellence Limited with
completion expected within the next two weeks. The cash
consideration for the disposals is €2 and CVS is providing a
£600,000 unsecured loan at a market rate to Global Veterinary
Excellence Limited.
Global Veterinary Excellence Limited
is a company owned by former director of these subsidiary entities,
James Cahill. James, a veterinary surgeon, was with CVS for
six years and has over 30 years' experience in the
industry.
By virtue of James being a former
director of CVS subsidiary companies, he is a related party under
the AIM Rules for Companies and, when aggregated, the two disposals
constitute a related party transaction under AIM Rule 13. The
directors of CVS Group plc consider, having consulted with the
Company's nominated adviser, Peel Hunt, that the terms of the
transactions are fair and reasonable insofar as the Company's
shareholders are concerned.
Financial effects of the disposals
Both the Netherlands and Republic of
Ireland operations are loss-making and for the financial year ended
30 June 2023 had combined revenue of £19.4m; adjusted
EBITDA1 loss of £0.2m; loss before tax of £6.8m, which
included a £2.3m exceptional write off; and net assets with a
carrying value of £16.4m in the Group consolidated accounts.
The forecast for the year to 30 June 2024 is a combined adjusted
EBITDA loss of approximately £2.0m and loss before tax of
approximately £6.0m. It is expected that CVS will make a
non-cash write-down in its FY2024 accounts in relation to the
disposals.
These operations have had a negative
contribution to the Group's operating cash flows and significant
management focus would be required to address operational
performance. Therefore, following their disposal, it is
expected that more capital will be able to be allocated to the
Group's growth strategy and management will be free to focus on the
delivery of the Group's growth strategy.
Richard Fairman, CEO, commented "Our
Netherlands and Ireland practices no longer fit with our strategy
of focusing on growth in the UK and Australian markets. We have
exciting plans to expand in Australia and this disposal will free
up working capital and management capacity to support our continued
expansion.
We are delighted to have found a
solution that enables our former colleagues to continue to deliver
high quality veterinary care in the Netherlands and Republic of
Ireland and wish James and Global Veterinary Excellence Limited
well as an independent business."
Notes:
1. Adjusted EBITDA (Earnings Before Interest, Tax,
Depreciation and Amortisation) is profit before tax adjusted for
interest (net finance expense), depreciation, amortisation, costs
relating to business combinations, and exceptional
items.
2. Financial numbers provided consistent with IFRS and may
differ to locally reporting general accounting
standards
CVS
Group
plc
via
Camarco
Richard Fairman, CEO
Ben Jacklin, Deputy CEO
Robin Alfonso, CFO
Peel Hunt LLP (Nominated Adviser & Joint
Broker)
+44 (0)20 7418
8900
Christopher Golden / James Steel /
Andrew Clark / Lalit Bose
Berenberg (Joint Broker)
+44 (0)20 3207
7800
Toby Flaux / Ben Wright / James
Thompson / Milo Bonser
Camarco (Financial
PR)
Ginny Pulbrook
+44 (0)7961 315 138
Geoffrey Pelham-Lane
+44 (0)7733
124 226
About CVS Group plc
(www.cvsukltd.co.uk)
CVS Group is an AIM-listed
provider of veterinary services with operations in the UK, and
Australia. CVS is focused on providing high-quality clinical
services to its clients and their animals, with outstanding and
dedicated clinical teams and support colleagues at the core of its
strategy.
The Group now operates c.460
veterinary practices across its two territories, including
specialist referral hospitals and dedicated out-of-hours sites.
Alongside the core Veterinary Practices division, CVS operates
Laboratories (providing diagnostic services to CVS and
third-parties), Crematoria (providing pet cremation and clinical
waste disposal for CVS and third-party practices) and an online
retail business ("Animed Direct").
The Group employs c.9,000 personnel,
including c.2,400 veterinary surgeons and c.3,400
nurses.