26th Sep 2024 12:27
(Alliance News) - CVS Group PLC on Thursday said annual profit fell despite revenue growth, due to increased expenses and the effects of a cyber attack earlier in the year.
The Norfolk, England-based provider of veterinary services said pretax profit dropped 37% to GBP38.2 million in the financial year that ended June 30 from GBP60.7 million. At the same time, revenue grew 9.9% to GBP647.3 million from GBP588.9 million.
The decline in profit was "due to an increase in business combination costs, finance expense and depreciation from investments made, and GBP5.8 million of exceptional costs in relation to the cyber incident, cloud migration, and the Competition & Markets Authority process".
Back in May, CVS said it would continue to "proactively" support the UK competition regulator, as the CMA launched an 18-month investigation into the supply of veterinary services for household pets.
Cost of sales grew 12% on-year to GBP369.4 million from GBP330.8 million, whilst administrative expenses rose 20% to GBP227.1 million from GBP189.7 million.
In April, CVS Group intercepted a cyber threat which involved unauthorised external access to some IT systems and caused "considerable operational disruption" as increased levels of security and monitoring meant a reduction in working efficiency.
Like-for-like sales increased 2.9% during the year, slowing from 7.3% growth the year prior. This was the result of not just the cyber incident, but "a combination of softer demand given wider publicity around the veterinary sector and the continued cost of living pressures".
CVS Group declared a final dividend of 8.00 pence per share, up 6.7% year-on-year from 7.50p. The company pays no interim dividend, so the final dividend represent its total annual payout.
The company said it is "well-positioned to deliver attractive growth in shareholder value over the medium term", and that it is "comfortable" with consensus estimates for financial 2025.
Chief Executive Officer Richard Fairman said: "We faced a number of challenges in the past financial year with our financial results adversely impacted by the cyber attack, the subsequent migration to a new cloud based practice management system and the impact from the CMA market investigation announced in May 2024. Notwithstanding this, the fundamentals of the sector remain strong and we have laid the foundations for future growth.
"We successfully entered the Australian veterinary services market with 24 practices (31 practice sites) acquired to date, and CVS's reputation established as an organisation that focuses on people and the provision of appropriate care to our clients and their animals."
He added: "In line with our stated strategy, we continue to invest in our UK practice facilities and equipment and have progressed our technology transformation with 375 of our 430 UK practices now operating on our new cloud-based practice management system. We also established a new clinical governance framework in the year which reflects our commitment to drive standards within the profession, and to support our clients in providing appropriate care to their animals."
Shares in CVS Group were up 4.5% at 1,170.00 pence in London on Thursday morning.
By Emily Parsons, Alliance News reporter
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