CVS also pointed to challenges within both the Irish and Dutch markets, as well as the “sub-scale nature” of the subsidiaries.
These factors, as well as significant investment opportunities in Australia, contributed to the decision to divest its operations here and in the Netherlands.
CVS said “significant” management focus would be needed to address the challenges in the Irish and Dutch businesses, with both having a negative contribution on cash flows.
Today’s News in 90 Seconds – May 22nd
The company owns about 500 practices, including in the UK and Australia, as well as three laboratories, seven crematoria, a pet insurer and an online retail business.
Both subsidiaries are being sold to Global Veterinary Excellence Limited, which is owned by James Cahill, a vet. Mr Cahill is a former director of these subsidiaries and has worked with CVS for six years.
He has more than 30 years of experience in the industry, CVS said. The group has provided a £600,000 unsecured loan at a market rate to Global Veterinary Excellence.
The Irish and Dutch businesses had combined revenue of £19.4m in the year to June 30 last year. Total adjusted earnings before interest, taxes, depreciation, and amortisation (Ebitda) loss was £200,000, while loss before tax was £6.8m in the year.
The forecast for the current financial year is a combined adjusted Ebitda loss of £2m, while loss before tax is expected to be £6m.
“Our Netherlands and Ireland practices 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 disposal will free up working capital and management capacity to support our continued expansion,” chief executive Richard Fairman said.
“We are delighted to have found a solution that enables our former colleagues to continue to deliver high quality veterinary care in the Netherlands and Republic of Ireland and wish James and Global Veterinary Excellence Limited well as an independent business,” he concluded.
