REG - CVS Group plc - Disposal of non-core operations

CVSAnnouncement

21/05/2024 07:00

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RNS Number : 1856P  CVS Group plc  21 May 2024

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 EBITDA(1) 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 (http://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.

 

 

 

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