CVS proves pet care pays with second dividend

CVS Group, the rapidly expanding veterinary surgery chain, has reported growing revenues and its second ever dividend as pet owners have continued to splash the cash during the dog days of the recession.

In the 12 months to the end of June CVS grew revenue by 7.1% to £108.7m while like-for-like sales increased by 2.9%.

Adjusted earnings before interest, tax depreciation and amortisation have increased by 7.9% to £15.7m (2011: £14.5m).

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Cash generated amounted to £15.5m down from the 2011 figure of £17.6m; reflecting a one-off improvement in supplier payment terms in the prior year.

Profits before tax decreased by 11.3% to £3.8m after a one off charge related to new financing terms agreed at the end of 2011.

In December last year CVS paid its maiden dividend of 1p per share, and it's now announced a further dividend of 1.5p per share.

CVS does appear to be going places. The stock price has risen 62% in the last year and the number of surgeries now absorbed into the chain has reached 231. CVS is the biggest employer in the UK veterinary profession with approximately 2,300 staff, including around 550 vets.

To counter the recession the group is focusing on its loyalty programme, which aims to improve customers purchases of vaccination and drug sales (which are migrating online).

The Chief Executive Simon Innes said of the results: "The progress made in growing the membership of our loyalty schemes and the expansion of our e-commerce activities have been notable achievements in the year. We continue to focus on organic growth whilst also developing new revenue streams and continuing to grow through selective strategic acquisitions."

One person who won't be around much longer at the firm is Chief Financial Officer, Paul Coxon, who will leave at the end of the calendar year.

Panmure Gordon reiterated its "buy" rating, saying "CVS has exceeded our expectations on most measures, reflecting a strong performance across the board. LFL [like-for-like] revenue progress has been pleasing and continues to deliver positive momentum into the current year."

The broker has maintained its forecasts at this juncture, but believes there could be "some upside potential from a variety of sources (organic, M&A, e-commerce) as we progress through the year."

CVS shares were up 4.9% at 11am.

BS