29th Mar 2019 08:37
LONDON (Alliance News) - Veterinary surgery group CVS Group PLC said Friday its interim profit fell sharply despite higher revenue as employment costs jumped amid reliance on locum vets, adding it since has made changes to improve the situation.
Shares in CVS were 15% higher at 594.75 pence on Friday.
For the six months ended December, pretax profit dropped 74% to GBP1.6 million from GBP6.2 million the year prior. This was despite revenue rising 24% to GBP195.1 million from GBP157.8 million the year before.
Profit performance was hurt by a sharp jump in administrative expenses to GBP78.5 million from GBP65.2 million the year before.
CVS does not pay an interim dividend.
"We have been active in addressing a number of the key issues which contributed to the underperformance in the first half and the board is pleased to see significant improvement in many areas where we had been experiencing operational and cost pressures," CVS Chair Richard Connell said.
In particular, CVS emphasised it had reduced vacancy rates for its veterinary surgeon and nurses as well as reducing the rates paid to them. This has cut costs associated with having to hire temporary, locum vets and nurses.
"We have seen further growth in our like-for-like sales and for the first eight months of the financial year to date our group sales are 5.0% above the equivalent eight-month period in the prior year and our Practice Division sales are 3.7% above prior year," Connell added. "The board believes this will lead to a full-year outcome better than anticipated in our January announcement."
In January, the firm had warned that it had become "heavily reliant" on more expensive locum vets and nurses which had resulted in employment costs "well above" the year prior. As a result of this, CVS had warned it expected earnings before interest, taxes, depreciation and amortisation for the full year to be "materially" below market expectations at the time.
"CVS is the leading integrated provider of veterinary services in the UK and, through the actions being taken, the board is confident that the group is positioned to deliver enhanced shareholder value in the future", Connell concluded.
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