Refinancing, Launch of SBB and Acquisition

CVS Group plc

26 May 2026

 

                                                                                                                                                                                    26 May 2026

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

CVS Group plc

("CVS", the "Company" or the "Group")

Refinancing, Launch of SBB and Acquisition

CVS, the UK listed veterinary group and a leading provider of veterinary services is pleased to announce:

·      a successful refinancing of the Group's £350m bank debt facilities on improved terms;

·      the launch a £50 million share buyback programme (the "Share Buyback Programme"); and

·      the acquisition of a further small animal practice in New South Wales, Australia.

CVS will announce its Full Year trading update on 23 July 2026, when it will also provide an investor presentation update to the market.

Bank Refinancing & Leverage

The Group's £350m bank debt facilities which were repayable on 21 February 2028 have been successfully refinanced on improved terms.  The new facilities comprise:

·      a term loan of £125m repayable on 20 May 2030

·      a revolving credit facility of £225m repayable on 20 May 2030

·      the existing overdraft facility of £5m, renewable annually.

The margin payable on drawn debt has reduced by 20 basis points.  These new facilities are provided by a syndicate of eight banks, including Westpac Banking Corporation, the first Australian bank to join the Group's financing syndicate.  The Group has an option to extend these facilities for a further year. 

The two financial covenants remain unchanged and are based on the ratios of bank test net debt to bank test EBITDA and bank test EBITDA to interest.  CVS has significant headroom in both committed and undrawn facilities and covenant headroom to continue to invest for growth.

The Group remains committed to maintaining leverage at no more than 2.0x bank test net debt / bank test EBITDA. Where appropriate the Board will consider temporarily increasing leverage above 2.0x for attractive acquisitions that both fit the Group's growth criteria and provide a clear runway to return to below 2.0x.

Capital Allocation

The Board regularly reviews the appropriate allocation of capital in support of organic growth, executing against the Group's acquisition pipeline and returning excess capital to shareholders where appropriate.  Following the successful refinancing and the conclusion of the CMA process, the Group reaffirms its approach to capital allocation.

This capital allocation framework is based on a hierarchy of clear priorities, supported by a disciplined approach under which each investment opportunity is assessed against other capital deployment opportunities and the options considered most value accretive over the longer term are selected.  The Group's capital allocation priorities are:

Acquisitions to accelerate sustainable growth

The Group has an attractive pipeline of accretive, bolt-on acquisition opportunities currently focused on Australia, with the opportunity to acquire in the UK following the recent conclusion of the Competition and Markets Authority process, complementing the existing practice portfolio. The Group expects to deploy c.£50 million per annum in Australia, subject to timing and availability of opportunities that meet the Group's criteria.

The Board is confident that accretive long-term shareholder value will be created from further acquisitions in Australia. In line with our policy, the Company retains flexibility to make additional attractive acquisition opportunities and adjust the quantum of the Share Buyback Programme as appropriate in order to drive optimal shareholder returns.

The Board is pleased to announce the acquisition of a further single site first opinion companion animal practice in Sydney for an initial consideration of A$8.2m (c.£4m).

The Board is also pleased to announce that contracts have been signed, subject to completion, for a further practice acquisition in Australia with completion expected in the coming weeks. Initial consideration is A$3.2m (c.£1.7m).

Investment to maximise organic growth

The Board has a disciplined approach to capital investment aimed at delivering accretive returns significantly in excess of the Company's cost of capital.  This investment is focused on delivering increased revenue and enhanced margins through improved clinical facilities and equipment, enhanced client experience and loyalty through new technology and improved employee engagement and retention. This investment is expected to amount to approximately £30m per annum with each investment assessed against our criteria and other uses of capital.

Maintaining a healthy balance sheet

The Group benefits from favourable cash flow dynamics with a targeted operating cash conversion in excess of 70%. Combined with the Board's disciplined approach to capital allocation, this underpins a lower cost of capital (as recently evidenced through the refinancing), firepower for both organic and inorganic growth and resilience through economic cycles.  Furthermore, and as noted above, the Group has significant headroom in both committed but undrawn bank facilities and covenants. 

Whilst the Board recognises differing appetites for leverage, it remains committed on maintaining leverage at no more than two times bank net debt / EBITDA. However, if additional attractive acquisitions arise, the Board will consider temporarily increasing leverage above 2.0x, provided there is a clear runway to return to below two times leverage.

Ordinary returns to shareholders

Ordinary dividends are an important component of shareholder returns and the Board believes that a progressive dividend policy remains appropriate for CVS. The Board expects to recommend the payment of a final dividend in respect of the financial year to 30 June 2026 and will announce details of this in line with the Group's standard financial calendar reporting.

Additional cash returns to shareholders

Any capital deemed surplus to the four key priorities above may be returned to shareholders, with the quantum and form of such returns to remain under review by the Board and based on prevailing conditions.

Launch of Share Buyback Programme

Following the announcement of the CMA's Final Decision Report, the favourable structural growth drivers for the Group, an attractive pipeline of M&A, and the Company's successful move to the Main Market and inclusion in the FTSE 250 index, the Board believes the Group is well-positioned for growth.  However, the impact on markets generally from the considerable global macroeconomic and more recent UK political uncertainty has been substantial and also seen in the Company's current rating making a buyback of the shares attractive.

In light of the successful refinancing and fully consistent with the Group's capital allocation priorities, as outlined above, the Board has approved a Share Buyback Programme to return up to £50m to shareholders, further details of which are set out in a separate announcement. 

The programme will be conducted within the authority granted by shareholders at the Annual General Meeting on 18 November 2025 and in accordance with the UK Market Abuse Regulation and the FCA's Listing Rules. The Company has entered into irrevocable, non-discretionary arrangements with both Peel Hunt LLP and Joh. Berenberg, Gossler & Co. KG, London Branch to conduct purchases on its behalf, including during any closed periods. Purchases will be made in the open market and the shares acquired will be cancelled.

A further announcement will be made in due course confirming the maximum number of shares that may be repurchased and any other relevant terms. Pursuant to LR9.6.6 the Company will announce details of any purchases made under the programme by no later than the end of the 7th daily market session following the calendar day on which such transaction occurred, as required by MAR.

Full Year Trading Update and Investor Presentation on Capital Allocation

The Group's Full Year trading update will be issued on 23 July 2026 as previously announced.

The Group intends to host an investor presentation alongside the announcement of the Full Year trading update, when the Group will provide a more detailed update on its capital allocation priorities as well as more information on past and anticipated returns from its investments.

CEO Succession

Further to the announcement on 30 March 2026 of Richard Fairman's intention to retire, the Board is making progress, although at early stages, with identifying a successor. The Company will provide an update when appropriate.  Richard remains committed to leading CVS until a successor is appointed.

Richard Fairman, CEO, commented:

"We are pleased to have refinanced our bank facilities through to May 2030 on improved terms. This provides additional flexibility and firepower to launch a meaningful share buyback programme, alongside disciplined capital allocation in enhancing our estate and quality of service to our customers and investing in our attractive pipeline of accretive acquisitions.

We look forward to updating investors at the time of our Full Year trading update on how this approach underpins the delivery of shareholder returns."

Contacts

CVS Group plc                                                                                                                                             via FGS Global

Richard Fairman, Chief Executive Officer

Robin Alfonso, Chief Financial Officer

Paul Higgs, Chief Veterinary Officer

Charlotte Page, Head of Investor Relations

FGS Global

Faeth Birch                                                                                                                                             [phone]

Charlie Chichester                                                                                                                          [e-mail]        

The information contained within this announcement is deemed by CVS to constitute inside information as stipulated under the Market Abuse Regulation (EU) no. 596/2014 (as incorporated into UK domestic law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR"). On the publication of this announcement via a regulatory information service, this inside information is now considered to be in the public domain. The person responsible for arranging the release of this announcement is Scott Morrison, Group General Counsel and Company Secretary.                                                                                                                     

About CVS Group plc (www.cvsukltd.co.uk)

CVS Group is a leading provider of veterinary services, operating in the UK and Australia, listed on the Main Market of the London Stock Exchange.  CVS is focused on providing high-quality clinical services to its clients and their animals, with outstanding and dedicated clinical teams and support colleagues at the core of its strategy.

The Group operates over 475 veterinary practices across its two territories, including specialist referral hospitals and dedicated out-of-hours sites. Alongside the core Veterinary Practices division, CVS operates Laboratories (providing diagnostic services to CVS and third-parties) and an online retail business ("Animed Direct").

The Group employs 9,000 personnel, including 2,500 veterinary surgeons and 3,300 nurses.

 

END