LONDON (ShareCast) - Britain’s biggest veterinary chain, CVS Group, has seen revenues climb on the back of a strong performance from its 225 surgeries while laboratory and crematorium income also rose.

Revenues in the six months to the end of December were £54.0m (2010: £50.5m). Like-for-like (LFL) sales increased by 2.1% over the the equivalent period of 2010.

Adjusted profit before tax increased to £2.7m (2010:£2.2m) while adjusted earnings before interest tax depreciation and amortisation (EBITDA) rose to £7.8m (2010: £7.2m), which broker Peel Hunt said was slightly ahead of expectations.

CVS makes 93.7% of its money from its Practice business, a collection of 225 vet surgeries scattered across the UK. The number of surgeries increased from 214 in 2010 as the company continued its strategy of consolidating the UK veterinary market, of which it estimates it has a 10% share.

Practice revenues grew by £3.5m during the year, on the back of acquisitions and the performance of its Animed Direct online offering, which sells animal medicines to consumers.

The Laboratory business provides diagnostic services both within the group and to third parties; revenues grew 3.8% over 2010, with adjusted EBITDA hitting £0.7m.

The final part of the CVS puzzle is its crematorium at Rossendale in Lancashire, which is going great guns. Revenues were up 8.1% on the prior year at £0.4m while EBITDA grew 1.1% to £0.2m.

The firm says it anticipates paying a dividend of 1p per share at the end of 2012.

Commenting on the results, Simon Innes, CVS’s Chief Executive said: “The group is maintaining its focus on developing the core business, maximising potential revenue opportunities, identifying cost reduction opportunities and growing through selective strategic acquisitions."

Peel Hunt, meanwhile, said it is sticking with its "hold" rating on the firm, saying the company is well on track to meet its full-year target "clean EBITDA" target of £15.0m. "There was some help from the mild winter, but there will also be a benefit from acquisitions in H2 [the second half]," wrote Peel Hunt analyst Charles Hall.

"CVS is making good progress and there is plenty of potential to further consolidate the veterinary industry (market share currently 10%). However, the key driver for profits is LFL sales and the underlying trend is still slightly negative. We retain our Hold recommendation as we want to see positive underlying LFL growth before being positive on the shares," Hall concluded.

Shares in CVS had risen 6.9% by 11:15. The stock has climbed 34% in the last 12 months.

BS

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