CVS Group plc (lon:cvsg)
CVSG – Promising But Possibly Expanding Too FastCVSG?

CVS Group plc Financials

ItemCurrent PeriodPrevious Period
YearN/A N/A
Adjusted Earnings
Adjusted EBITDA
Statutory Profit
Adjusted Profit
Total Debt
Net Debt

Commentary History
No ticker supplied in the url so commentary history can not be collected.
CVS Group plc Share Price
Grade:No grade has been assigned to this company
Title: CVSG – Promising But Possibly Expanding Too FastCVSG?
Company: CVSG - CVS Group plc
Share Price Then: 418p
Author: Ian Smith
Date: Mon 04 Feb 2019
Comments: CVSG owns over 500 veterinary surgeries in the UK, Netherlands and Republic of Ireland, employing over 6,150 staff, acquiring 52 in 2018 and 62 in 2017.

With a last reported turnover of about £327million and an operating profit of £17.7million they are more than just a vet.

They cover pets, horses and farm animals,
Laboratories that provide services to both the group vets and third parties (68%),
Crematoria that provide services to both the group vets and third parties,
MiPet, A range of own brand drugs,
MiPet Cover, own brand pet insurance,
Animed Direct, On-line pet shop for medicine, food and fun things.

With over 100 new practices acquired over the last two years this has to be a concern, along with central adin costs of just under £10million or 3% of revenue.

Some of this growth was funded by a share placement in 2018 which generated £58million reducing debt from £100m to £69m, but by the end of Dec 2018 this had increased to £116m.
Is this too muich debt? The accounts use an “Adjusted EBITDA” which makes Earnings of £17.7m an Adjusted EBITDA of £47m and a Debt To Adjusted EBITDA of about 2.4.

This increase in debt is mostly due to acquisitions rather than operating costs but the debt includes £65 million due in 2021. At this point in time with about £15million of cash it is hard to see there being enough cash to pay it.

Sure the group is getting bigger but if you look at the Intangible assets £203m/£167m (2018/2017) and Property, plant and equipment £48m/£43m (2018/2017) it seems that many of the acquisitions are not coming with buildings, just the goodwill.

I also follow Dignity funeral services and they have had a problem where they have bought local funeral homes and very quickly the corporate culture settles in and sales drop off.

So unless the anti-compete clauses are very strong there is a danger of new surgeries appearing within a few years and a few miles taking back the sold customers.

What is attractive to me is that we are seeing a group becoming big enough to be more than just a collection of local vets.

Read Count: 246/6042

Buy/No Buy In A Nutshell
Initial Review Price0p
Last Review Price0p
Last Review Date
Navigation & Details

Share Commentaries, their purpose.