30th March 2015
CVS Group plc
(the “Company” or the “Group”)
Acquisition of Your Vets (Holdings) Limited ("YourVets") and New Bank Facilities
Acquisition of YourVets
CVS, the UK's leading provider of integrated veterinary services, is pleased to announce it has signed a binding agreement to acquire the entire share capital of YourVets, a provider of small animal veterinary services in the West Midlands and Essex comprising seven surgeries (the “Acquisition”).Completion, which is subject to customary final conditions, is expected to take place on 30th March 2015.
YourVets was founded in July 1997 in Coventry and now offers a model aimed towards a high quality and affordable offering. The key driver has been the roll-out of a 'super clinic' model providinga full range of high-calibre veterinary services, including two 24-hour centres.
YourVets operates seven large veterinary clinics in the Midlands (Nuneaton, Coventry, Wythall, Stechford and Solihull) and Essex (Dagenham and Rayleigh). The clinics at Solihull and Dagenham are immature, having been opened in 2012and 2014 respectively. The clinics at Rayleigh and Coventry provide out-of-hours and referral services.YourVets has some 45 professional vets and over 200 staff in total.
In the year to 31st March 2014, the last for which published accounts are available, YourVets generated turnover of approximately £9.2 million,Earnings before Interest, Tax and Depreciation and Amortisation (“EBITDA”) of c. £0.2 million and a loss before tax of £0.8 million. As at 31st March 2014 net assets of YourVets were £2.4 million.
Sales and EBITDA of the acquired business for the year to 31st March 2015 are expected to be in the region of £10.0 million and £0.8 million respectively, with significant growth at the immature Solihull and Dagenham sites.
The total consideration for the Acquisition is £12.0millionincluding costs. Thisfigure is subject to adjustment based on the working capital and debt of YourVets as at 30thMarch 2015. In addition net debt of approximately £2.0millionwill be acquired by the Group. Intangible assets and goodwill of approximately £12.6million are expected to arise on acquisition.
Approximately £9.5million of the consideration will be met by way of drawdown from new debt facilities, described in more detail below. £2.5million of the consideration is payable in Loan Notes bearing interest at 10.0% p.a. The LoanNotes and all associated interest are payable on 1st March 2018.
YourVets is a strongfit with the Group’s existing operations, significantly increasing the Group’s presence in the Midlands andoffering a full range of services, including both out-of-hours and referrals, consistent with the Group’s strategy of growingoperations in these areas. As part of the CVS Group, YourVets is expected to benefit substantially from better purchasing power as well as overhead synergies. These benefits are expected to approach £1million within three years.
New Bank Facilities
CVS is also pleased to announce that it has entered into a new bank facility agreement with existing lender RBS, which provides the business with total facilitiesof £85millionto support the Group’s organic and acquisitive growth initiatives over the coming years. These facilities replace the existing banking arrangements on more favourable terms, including a lower coupon,andcomprise the following elements:
- A fixed term loan of £32.0million, repayable on 27th January 2017via a single bullet repayment;
- A five year Revolving Credit Facility (“RCF”) of £48.0millionthat runs to27thMarch 2020; and
- A £5.0million overdraft facility renewable annually.
The facility provides an option for the Group to refinance the repayment of the £32million fixed term loan through an additional RCF, but this is not a committed facility.
The two main financial covenants associated with these facilities are based on Group Borrowings to EBITDA and Group EBITDA to interest.The facilities require cross guarantees from most of the CVS Group’s trading subsidiaries but are not secured on the assets of the Group.
Commenting on the Acquisition and on the new facility agreement, Simon Innes, CVS Chief Executive, said:
"YourVets is a well-established, high quality operation and we are delighted to welcome the YourVets staff to CVS. This acquisition, together with the recently acquired Townsend Veterinary Practice in Bromsgrove, establishes a significant presence for CVS in the West Midlands. The Essex branches of YourVets are an excellent geographic fit with our existing eight sites in the county.
The new borrowing facility provides CVS with the flexibility, at a comfortable level of gearing,to fund the ongoing development of the business across multiple organic growth initiatives together with additional acquisition opportunities.”
Contacts:
CVS Group plcSimon Innes, Chief Executive
Nick Perrin, Finance Director / Tel: 01379 644 288
N+1 Singer (Nominated Adviser & Broker)
Aubrey Powell
Alex Wright / Tel: 020 7496 3000
About CVS Group
CVS Group plc (“CVS” or the “Group”) is the UK’s leading provider of integrated veterinary services.
Established in 1999to acquire and operate veterinary practices, the Group now has four key business areas: veterinary practices, diagnostic laboratories, pet crematoria and an on-line dispensary. In addition, the Group operates a buying group for third party practices and is developing a range of own brand veterinary medicines.
Following the acquisition of Yourvets, CVS Group plc will operate 283surgeries, up from 128 in 2007 at the time of the Group’s AIM IPO. The practice division is also supported by the Group’s referrals business which provides high value specialist services to both its own and third party practices.
The Group has five laboratories, which provide diagnostic services to third party and CVS owned practices, and 3 pet crematoria. Since 2013/14 the Group’s laboratories have also begun to supply in-house analysers and reagents to the Group’s own practices and externally.
The Group’s on-line dispensary, Animed Direct, sells medicines, pet food and other animal related products in the UK.
To date, the Group has developed eight own brand products under the name MiPet, with more planned, and has over 200,000 members enrolled in its Healthy Pet Club Scheme, which provides preventative medicine to Group customers’ pets as well as a range of discounts and other benefits.
The Group’s MiVetClub buying group, launched in August 2013, uses its buying strength and range of complementary businesses to provide a unique offering of services to other practices, so as to strengthen their business as well as the Group’s.
CVS also has a wide range of clinical and managementtraining schemes for all of its employees.These include a unique graduate development programme, assisting newly qualified vets in the challenging transition from university to practice, and an innovative Nurse Academy, providing structured post qualification clinical training. The breadth of the Groups businesses provide for a career structure for vets that is unique to the industry.
In addition to various organic growth initiatives, the Group is committed to further expansion through acquisitions and has a successful track record of profitably integrating acquired businesses.The Group is aware that there remains a large number of independent businesses that recognise the benefits of becoming part of a larger specialist group and the breadth of service that it can offer. The CVS Group structure provides central administrative services including finance, human resources, marketing, health and safety, information technology and purchasing, allowing the practitioners in acquired businesses to concentrate on service provision, including clinical care.
For further information, please visit the Group’s website,