CVS Group annual profit falls on regulatory costs but hikes dividend

CVS Group PLC on Thursday announced a higher dividend as its share buyback programme also continues, while annual profit declined a notch despite revenue growth.

CVS shares were down 5.8% to 1,227.00 pence each on Thursday morning in London.

The Norfolk, England-based provider of veterinary services said pretax profit fell 1.8% to £32.0 million in the financial year ended June 30, from £32.6 million a year prior.

The company said this was due to remedial action related to requirements set by the UK Competition & Markets Authority. CVS has a market share of between 8% and 9% in the UK for the veterinary care market.

CVS said it spent £5.1 million on changing the branding of its UK practices to have 'CVS Vets' displayed prominently alongside its local practice name, to comply with requirements after the CMA in March published its final report on its investigation into the UK veterinary services market.

Adjusted pretax profit improved 7.6% to £84.9 million from £78.9 million.

Adjusted earnings before interest, tax, depreciation and amortisation climbed 5.1% to £141.5 million from £134.6 million.

Revenue rose 5.9% to £712.8 million from £673.2 million.

Cost of sales increased 2.5% to £397.2 million from £387.5 million.

The company recommended a final dividend per share of 9.0p, up 5.9% from 8.5p a year prior. The payout is the total for each year, as CVS doesn't pay an interim dividend.

CVS said its new financial year "is off to a solid start" as it remained confident in its future growth opportunity amid continuing demand for "high-quality" veterinary care.

It added that it is pleased with further expansion in Australia, where its number of practices has grown by 33% to 57 as at June 30, from 43 a year prior.

CVS expects its current £50.0 million share buyback programme, running since May, to be completed by November.

Chief Executive Officer Richard Fairman said: "Whilst the macro-economic backdrop remains challenging, we are confident in the essential nature of the services we provide and our ability to drive increased returns for all stakeholders. With the CMA investigation concluded, we can now focus all our attention on delivering great care, value and service to our clients and their animals. CVS is in a strong position to deliver growth over the long-term."

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