Norfolk-based CVS, the veterinary services provider consolidating a fragmented market, has hit the acquisition trail again.

It has acquired The Village Animal Hospital (VAH) for an undisclosed sum, a Surrey-based practice with a main surgery in Caterham acting as a state-of-the-art animal hospital. VAH also has branches in nearby Redhill, Oxted and Smallfield.

In line with CVS’s successful strategy, all the administration of VAH, which made £145,000 of EBITDA from £1.67m sales in the year to July 2007, will be consolidated within CVS’s central facility, driving significant cost savings and synergies. VAH will be added to an existing portfolio of 151 veterinary surgeries, six veterinary laboratories and one pet crematorium.

Chief executive Simon Innes, the former Vision Express boss who floated CVS at 205p in October 2007, says this is an ‘excellent’ acquisition for CVS, providing the group with a ‘major offering within the South East’ and sitting alongside the 17 surgeries it already owns in the region.

CVS, which finances acquisitions, such as the recent Rossendale Pet Crematorium deal, from internally generated cash, recently reported encouraging maiden AIM preliminary results.

For the year to June, operating profits advanced by 41% to £4.1m, on sales up 60% to more than £62m. Based on forecast pre-tax profits of £8.4m and earnings of 12.99p for June 2009, shares in CVS are trading on a prospective multiple of 11.1.

That looks undemanding, given growth prospects in a market with defensive characteristics, based on the fact people tend to find money to spend on looking after their pets, whatever the state of the wider economy. Buy.

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CVS Group	AIM	£66.77m	129.50p	0.00p
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