- Loss-making Dutch and Irish companies paid £1.71 to director
- Investors await updates on April cyberattack and March CMA investigation
CVS Group is in the process of selling its Dutch and Irish businesses for a face value of just 2 euros (£1.71), as it refocuses its efforts on its profitable operations in the UK and Australia.
The veterinary services provider, which runs 500 practices across its four territories, told investors on Tuesday it would divest from the Dutch and Irish businesses due to their “subscale nature” and “particular challenges” within each market.
The Dutch and Irish units made a combined pre-tax loss of £6.8 million last year and CVS said they were on track to post another loss of £6 million by 2024.
CVS bets on more profitable businesses in UK and Australia as it divests Irish and Dutch units
CVS added that the “significant management focus” needed to turn around the ailing Dutch and Irish units would be better invested in the group’s growth strategy.
Boss Richard Fairman said: ‘Our practices in the Netherlands and Ireland no longer fit with our strategy of focusing on growth in the UK and Australian markets.
“We have exciting plans to expand in Australia and this sale will free up working capital and management capacity to support our continued expansion.”
The ancillary businesses will be sold to Global Veterinary Excellence, whose owner James Cahill is a veterinarian and former director of the units.
CVS is also providing a £600,000 unsecured loan “at a market rate” to Global Veterinary Excellence, the group said.
Fairman added: “We are delighted to have found a solution that allows our former colleagues to continue providing high quality veterinary care in the Netherlands and the Republic of Ireland and we wish James and Global Veterinary Excellence Limited the best as an independent business.”
CVS experienced “significant operational disruption” in April after being hit by a cyber incident, forcing it to accelerate the rollout of moving its IT infrastructure and practice management system to the cloud.
Analysts at Peel Hunt said CVS is “yet to quantify the impact” of the cyber attacks, but the broker expects it to be “greater than the benefit” provided by the sale of its Irish and Dutch businesses and a “short-term” impact. ” in comparable sales.
Peel Hunt reiterated its ‘Add’ rating on Tuesday with a 1,500p share price target.
CVS will also focus on the outcome of the Competition and Markets Authority’s investigation into the veterinary sector launched in March, with an update expected soon.
CMA concerns that British pet owners could be overpaying for medicines and prescriptions sent shares across the sector tumbling, and CVS shares have yet to regain ground after the sell-off.
CVS stock They were down 1.3 percent at 1,046 pence in early trading on Tuesday.