Shares in CVS Group Plc (LON:CVSG) fell by 33.4% to £1.05p this morning on news that the veterinary services group was set to miss revenue targets in the full year to June 30. CVS warned that that the figure was likely to be around £85m – down £1m on expectations for the final quarter of the year. Investors had already been alerted in May to the fact that the company – which builds revenue through acquisitions – had seen a number of deals slip into the second half of the year, meaning that expected revenue growth was likely to fall short. In today’s update, CVS noted that trading conditions had remained tough since the weather affected months of December 2009 and January 2010.
The company said that while it was disappointed to report lower than anticipated turnover, its performance would still reflect modest like-for-like growth for the year as a whole, despite the challenging environment. In turn, it said it had delivered a better than expected level of acquisition activity in the year, which is expected to generate annualised turnover in the region of £21m, compared to the £12m expected at the start of the financial year. However, the bulk of those deals were completed in the latter part of the financial year, which means that they will only deliver £6m of sales in this current year. The total number of surgeries acquired in the year amounted to 41 together with one laboratory.
Three new acquisitions have been completed in June funded by internally generated cash, comprising five surgeries located in the vicinity of Mansfield, Horsham and Burgess Hill respectively. The combined annual turnover for the five surgeries is around £2.7m. Separately, the company has hired Steve Scully as the Director of Practice Operations for the group.