CVS (CSVG:AIM) has delivered reassuring half year results following its shocking profit warning in November, but its shares decline 8.5% to £11.16 on a news of a discounted fundraising.
The veterinary services provider has raised approximately £60m by issuing around 5.58m shares at £10.75 each. This represents an 11.9% discount to Thursday’s closing price.
The amount of shares to be issued equates to just below 9% of the company’s existing share capital.
The money will be used to pay down debt and fund acquisitions in approximately £40m of deals over the next six months in the UK and the Netherlands.
CVS has been one of AIM’s most successful stocks, enjoying a 563% rise in its share price in the first 10 years of being on the stock market.
Sadly it hit a rough patch late last year. Investors were surprised by a slowdown in sales growth on the back of economic uncertainty and a shortage of UK clinicians.
Shares in CVS had been recovering since the profit warning that wiped off a third of the company's value last year.
They reached a post-profit warning low of 855p on 6 December and had subsequently risen by 43% to £12.20 last night. Today’s news knocks that recovery off track.
In the second half of 2017, pre-tax profit dropped 21.3% to £8m, while its guidance implies that the full year dividend may remain flat year-on-year.
EDIT: This article has been updated to reflect the exact details of the placing which were released after the original article was published.
