Cvs Share Discussion Threads

[lomax99] 06/4/2009 12:58

C2I

I understand your hesitation re the recession, but think that sales will hold up better than you suspect as pets are viewed as members of the family. Your point on hand overs to local charities is noted, this may well happen but I doubt it will have a significant impact.

The level/servicing of debt is an issue, strong cashflow is important and essential to fund expansion. Whilst not being keen on gearing up generally, I do wonder if internally generated cashflow will prove sufficient to take advantage of the opportunities on offer.

I see the real opportunity with CVSG being 1) The lack of corporate penetration into the small animal veterinary market; 2) Existing owners having limited options when coming to exit, hence low exit/YP's paid. 3) Margin improvement post acquisition - which should over time be substantial, given the ability to streamline operations (incl. centralising back-office functions), better purchasing power and the ability to share resources with other practises in a locality.

Focused margin improvement in respect of new/recent acquisitions, and actually realising these potential gains is critical. I would be happier if CVSG had communicated their intention with regards to how they are going to adequately cover/replace the Operations Directors role, which one would imagine should have quite an impact on service delivery/realisation of the anticipated margin improvements.

[u813061] 06/4/2009 11:40

Plenty of buys going through. Looks like this one has bottomed out.

[contrarian2investor] 24/3/2009 11:48

Hi all,

Further to my previous post (please see below) I am still on the sidelines inspite CVSG good results on 17/3/09. My reasoning is two fold:
The expected rise in unemployment to 3m
The expected rise in house repossesions.
Both of which will leave the cash-trapped pet owner with little funds to pay for vet bills. So a nation of pet owners will unfortunately start to hand over their pets to local charities such as the PDSA.

Just my humble opinion.

c2i

contrarian2investor - 30 Apr'08 - 18:02 - 43 of 75 edit


serotine and other holders,

post 16 OF 22
"The only negative is they are paying LIBOR + 1.5% on an existing 32 million loan plus the same (I think) for their 12 million drawdown facility so this may impact on profits. However if interest rates do fall (and LIBOR in tandem) then this could be good news for CVS".

I too love the business model and the fact that it is essentially recession proof as pet lovers are left with no choice but to pay if they need to use a vet.

Even if CVSG just matches Dignity's performance since its IPO it will be a serious profit maker for shareholders. IMHO

However I remain on the sidelines for the moment until the LIBOR RATE decreases and their debt repayments do likewise.

Any thoughts??

C2I

[lomax99] 18/3/2009 16:47

Serotine, I agree with your comments re adequate profits/debt.

I have not had much time to look at the results, but since they were giving out purchase prices for recent acquisitions I thought it would be worthwhile to look at these. The last 5 acquisitions (Cleveland, Surrey, Hampshire, Rossendale & Joel) cost a total of £6.135M (out slightly from the £5.93M quoted). This bought businesses which generated profits of £1.163M on T/0 of £6.736M, an ROT of 17% and an average purchase price of 5.3 YP (which is in their stated range of 4-6 YP).

Perhaps the surprising thing when looking at these individual deals is the range in ROT's being realised before, from Surrey at 8.7% - with a YP of 9.3, to an ROT for Joel of 40%, paying a YP of only 2.9! No doubt there is a story to tell behind these figures, but they do seem strange and present one hell of a range/opportunity to understand and look to narrow the range!

[serotine] 18/3/2009 06:42

I really want this share to do well as the basic story is sound but seems to me they are not generating enough profits compared with their debt. I'll keep watching to see if things improve in the future...

[tooth fairy] 17/3/2009 08:44

Figures look good, surprising no one spotting this little gem bucking market trends with guaranteed clientele!

[lomax99] 13/3/2009 08:42

Found this snippet:

-----------------------

CVS GROUP (AIM:CVSG)
Mkt cap £68m

Veterinary practices and complimentary veterinary diagnostic businesses.
Strong position in UK veterinary market (defensive attributes) and highly cash generative.

The largest UK veterinary group which now includes an animal hospital, 161 surgeries and 6 veterinary laboratories and pet crematorium. Defensive attributes and highly cash generative (customers pay them before they need to pay suppliers). All acquisitions to date have been financed through a combination of existing debt facilities and internally generated cash.

Market growth is a modest 4% - 5% per annum. Apparently 50% of households have a pet and 90% of their revenue is unavoidable surgery; recession proof?
Concerns that veterinary market may be effected by pet owners holding back on expenditure or pet insurance.

Leading position in UK market and excellent long term growth with the potential to fund acquisitions through internal cash flow and ability to generate excellent returns on invested capital.

Debt is high and there is a requirement to repay debt in the current and next 5 years, however, this should be easily be met out of cash flow, but would reduce funds available for acquisitions.

Operations Director stepped down in January 2009 to 'pursue other interests'.

Acquired a further Suffolk based practice in January from cash resources.

Shares were down approx 46% in 2008

-----------------------------

Funding constraints for acquisitions are a concern, as this is the real impetus for growth in terms of the significant post acquisition earnings enhancement which should be realisable from streamlining processes and buying efficiencies.

[lomax99] 12/3/2009 13:04

Some quite chunky sells today, I hope there are no unpleasant 'surprises' in next week's results!

[lomax99] 09/3/2009 14:41

I will be interested to see an update on how they intend to cover the Operations Director's role in light of Mr Finn's departure. This is important, as it is the streamlining of operations at a local level, which will drive enhanced productivity/returns and justify the significant increase in investment in central resource we have seen over the last couple of years.

[serotine] 05/3/2009 07:59

another acquisition in the bag and self-funded. Results on the 17th March so look forward to seeing what they have to say. They must be saving a bit on interest payments...

[lomax99] 28/1/2009 08:12

Thanks, unfortunately all it's done is to help lower my prospective break even point! Hopefully we will get news of a few more acquisitions before the results date.

[serotine] 28/1/2009 07:56

well done on purchase at £1.22 and I hope it works out for you. The next results should be in March if it follows the same pattern as last year.

[lomax99] 27/1/2009 16:03

yes, may be better not to speak too soon, but I was thinking of adding to my last purchase at £1.22 when it started this recent run.

[serotine] 27/1/2009 14:49

CVSG on a bit of a roll recently

[lomax99] 14/1/2009 07:59

It will be interesting to see how they propose to cover/fill Mr Finn's role as Operations Director. Especially for such an acquisitive business, it does require sufficient focus to ensure that efficient operations achieve the synergies being targetted.

[serotine] 17/12/2008 09:47

lomax - lol!

I've been out for a while but am starting to get tempted again. I just checked the 3-month libor rate and it is down from just over 6% in September to about 3.25% today. That must have a big saving on their debt repayments. Do you know how much that will save them over a year on interest? Also it looks likely that rates will fall further so it could get better.

[lomax99] 17/12/2008 09:32

Well spotted, I have just averaged down (again!)

[serotine] 17/12/2008 07:56

Article re CVSG from Scotsman under 'One to Watch'

[lomax99] 08/12/2008 08:31

No sooner said.... The Chairman has just bought 20k, a marked increase in his personal holding. I wonder if any of the others will follow suit.

[lomax99] 02/12/2008 12:11

Excellent news on the acquisitions, we should hopefully start to see the significant investment in central infrastructure pay-off as synergies (cost, cross selling, etc) start to be realised.

I noticed the announcement the other day on the Directors LTIP, however given the decline in the share price to well below float levels it would be good to see some of the Director's actually buying some shares in the market - if they are minded to do so, hopefully we are not some way from where they consider to be the bottom.......

[lomax99] 15/11/2008 22:29

CT - I need to look a bit closer about your concern about their ability to finance aaquisition led growth, in the meantime:

CVS Group - BUY
Companies: CVSG
14/11/2008

Norfolk-based CVS, the veterinary services provider consolidating a fragmented market, has hit the acquisition trail again.

It has acquired The Village Animal Hospital (VAH) for an undisclosed sum, a Surrey-based practice with a main surgery in Caterham acting as a state-of-the-art animal hospital. VAH also has branches in nearby Redhill, Oxted and Smallfield.

In line with CVS's successful strategy, all the administration of VAH, which made £145,000 of EBITDA from £1.67m sales in the year to July 2007, will be consolidated within CVS's central facility, driving significant cost savings and synergies. VAH will be added to an existing portfolio of 151 veterinary surgeries, six veterinary laboratories and one pet crematorium.

Chief executive Simon Innes, the former Vision Express boss who floated CVS at 205p in October 2007, says this is an 'excellent' acquisition for CVS, providing the group with a 'major offering within the South East' and sitting alongside the 17 surgeries it already owns in the region.

CVS, which finances acquisitions, such as the recent Rossendale Pet Crematorium deal, from internally generated cash, recently reported encouraging maiden AIM preliminary results.

For the year to June, operating profits advanced by 41% to £4.1m, on sales up 60% to more than £62m. Based on forecast pre-tax profits of £8.4m and earnings of 12.99p for June 2009, shares in CVS are trading on a prospective multiple of 11.1.

That looks undemanding, given growth prospects in a market with defensive characteristics, based on the fact people tend to find money to spend on looking after their pets, whatever the state of the wider economy. Buy.

Save 50% off your first year's subscription to Growth Company Investor magazine, and gain immediate access to all the recommendations online. Click here.

James Crux
Market cap: £74.25m
PE Forecast: 11.1
Share price: 144p

[castleford tiger] 15/11/2008 15:09

Just looked at B/S and they look overstretched to me.
Net Curr lib is not a good sign.

The pot of 12 million is almost gone then there is no growth. Can they move forward by standing still?.
If i were running this i would be having 12 months generating some cash to free things up.

This could be a classic IPO were the Angels were paid too much and at some point all these balls are gonna come crashing down.
Lower int rates will help, but looking for cash with a B/S like this is a non-starter.

becarefull.

tiger

[castleford tiger] 15/11/2008 14:59

HOUSE Broker still banging the drum fiving a 240p target price on the company.

not sure but looks interesting.
The goodwill on the balance sheet must be huge as 75% of each purchase is just that.

tiger

[lomax99] 14/11/2008 08:50

Acquisition - The Village Animal Hospital (VAH).

This looks like an excellent acquisition, especially if the price paid was in line with previous guidance of 4-6 YP - indeed in the current climate, one might hope that it was at the lower end of the range. With a ratio of 4.5 support staff to 1 vet, it is difficult to believe that there is not "a significant opportunity to enhance shareholder returns...." with VAH.

[lomax99] 03/11/2008 14:02

Hopefully the re-introduction of prescription charges will provide a useful boost for CVS:

Pet owners hit by return of £15 charge on prescriptions
By Martin Delgado
Last updated at 10:24 PM on 01st November 2008
Comments (21) Add to My Stories Thousands of pet owners face having to pay more to treat their sick animals after vet prescription fees were reintroduced yesterday.

It means a bill of around £15 on top of the average £30 consultation fee for 120,000 owners who opt to buy drugs from cheaper online pharmacies rather than their vet.

There are fears the higher cost will leave some owners unable to afford treatment. For the past three years those who wish to buy medicines from pharmacies have been able to obtain a prescription from their vet at no cost due to a Government ban on fees.

The prescription allows them to order the drugs - often at a lower price than at the vet's - although they still have to pay for the medicines.

The ban was introduced in 2005 after Ministers accused vets of having a 'stranglehold' on the medicines market and the Competition Commission found consumers were getting a poor deal.

However, surgeries can once again start charging as ministers have decided that the market is now competitive enough .
There is no upper limit on the amount vets can demand for each prescription.
One online pharmacy, MedicAnimal.com, said it had already been contacted by an elderly woman who had received a letter from her vet informing her she would be charged £12.50 a time for prescriptions, which she could not afford.
Painful price: Owners fear pets will go untreated because of the fees

There is also concern the fees could lead to the spread of fake prescriptions and the sale of out-of-date medicines.
Animal health insurers Petplan said it was waiting to see whether owners would benefit from the new arrangements.
A spokesman said: 'We will be watching the situation very closely. At this stage it is too early to judge.'

More...'Unacceptable' prescription fees mean cancer patients are cutting back on food to pay for drugs


But Richard Hillman, president of the Society of Practising Veterinary Surgeons, welcomed the change and said he expected surgeries to charge between £7 and £15.
'Free prescriptions were in place for three years to regulate the market and give the internet guys a chance to get themselves established,' he said.

'They have now done that, so reintroducing charges is the right way to go. I would hope all veterinary practices will charge for prescriptions.

'People should be able to charge for the work they do and there is work involved in preparing and checking a prescription. It is a legal document and we take the responsibility seriously.'

Veterinary organisations have warned members that any evidence of overcharging could lead to a Government inquiry and a new ban on prescription charges.

Ordering medicines online is not always an option for owners. Some illnesses need to be dealt with immediately if the animal is to be spared suffering.One common urinary condition can cause the death of an adult male cat within 24 hours if untreated