CVS Group plc
Annual results
for the year ended 30 June 2013
Your pets, our priority
Simon Innes – Chief Executive Officer
Nick Perrin – Finance Director
Your pets, our priority
CVS Group Plc
Agenda
• Highlights
• Strategy
• Business review
–
–
–
–
–
Practices
Laboratories
Animed Direct
Crematoria
MiVetClub
• Financial review
• Appendices
www.cvsgroupplc.com
2
Your pets, our priority
CVS Group Plc
Highlights
Year ended
30 June 2013
Year ended
30 June 2012
Increase %
120.1
108.7
10.4
16.5
15.7
5.5
6.6
6.2
5.7
16.9
15.8
7.0
Operating profit (£m)
6.7
6.8
(1.1)
Profit before income tax (£m)
5.5
3.8
45.9
Basic earnings per share (pence)
7.1
5.1
39.2
Proposed dividend (pence)
2.0
1.5
33.3
Revenue (£m)
Adjusted EBITDA (£m)
Adjusted profit before income tax (£m)
Adjusted earnings per share (pence)
See appendix for definition of ‘adjusted’ items
www.cvsgroupplc.com
3
Your pets, our priority
CVS Group Plc
Highlights
Sales
Revenue Growth up 10.4% to £120.1m
Like-for-like sales +3.4%
£m
EBITDA
20
76.6
85.5
2009
2010
101.5
108.7
120.1
2011
2012
2013
Adjusted EBITDA up 5.5% to £16.5m
Acquired and integrated 14 surgeries
15
£m 10
5
140
120
100
80
60
40
20
0
12.5
13.1
14.5
15.7
2009
2010
2011
2012
16.5
Adjusted EPS
0
Adjusted earnings per share up 7.0% to 16.9p
Acquired Valley Pet Crematorium
20
Pence per share
2013
15
10
5
11.5
11.9
2009
2010
14.0
15.8
16.9
2011
2012
2013
0
www.cvsgroupplc.com
4
Your pets, our priority
CVS Group Plc
Highlights
CVS
70
CVS owns 252 surgeries and is the largest
provider of Veterinary services to Pet owners
in the UK
Companion Care
and Vets4pets
47
247
Medivet
92
Goddards
HPC membership numbers
Independent
Vetcare
204
111,916
120,000
100,000
80,000
65,490
Healthy Pet Club members up over
70% to 111,900
60,000
40,000
20,000
17,234
28,390
Animed Direct Revenue
6
0
2010
2011
2012
2013
5
£m
4
Animed Direct revenue up 62.0% to £4.9m
3
4.9
2
1
0
3.0
0.9
2011
www.cvsgroupplc.com
2012
2013
5
Your pets, our priority
CVS Group Plc
Strategy
Our vision
Our strategy
Outcome
Meeting all our
customers’ needs
To continue to be the
largest & best provider
of veterinary services
to pet owners in the
UK whilst providing a
growing return to our
shareholders
High quality clinical
care and excellent
customer service
Providing services to
other veterinary
practices
Growing the return to
shareholders
Expanding our
business through
acquisitions
www.cvsgroupplc.com
6
Your pets, our priority
CVS Group Plc
Strategy
Meeting all our customers’ needs
•
•
•
•
•
•
•
•
252 practices across the UK
Referrals and specialist expertise
Out of Hours and emergency services
Healthy Pet Club
Using modern diagnostic techniques
Our own diagnostic laboratories
Crematoria
Own brand products
www.cvsgroupplc.com
7
Your pets, our priority
CVS Group Plc
Strategy
Excellent customer service
•
•
•
•
•
All practices are part of RCVS Practice Standards Scheme
11 diploma holders and 45 certificate holders
30 staff on advanced practitioner training
24 graduates recruited and trained last year
Training provided to a high degree of clinical skill
www.cvsgroupplc.com
8
Your pets, our priority
CVS Group Plc
Strategy
Providing services to other veterinary practices
• MiVetClub, buying group, launched August 2013
Number of surgeries
300
Expanding through acquisitions
• Further small animal practices
• Additional opportunities in equine
and large animal practices
• Improve geographical coverage of
laboratories and crematoria
250
200
150
100
168
211
223
231
252
2010
2011
2012
2013
50
0
2009
Consideration paid
15
10
5
14.0
8.3
0
2009
www.cvsgroupplc.com
2010
4.2
3.8
2011
2012
7.7
2013
9
Your pets, our priority
CVS Group Plc
Strategy
Price (p)
300
Growing our share price
250
200
150
100
50
2008
2009
2010
2011
2012
Total shareholder return
0
Increasing shareholder return
-10
-20
-30
-40
-50
-60
-70
-80
2008
www.cvsgroupplc.com
2009
2010
2011
2012
10
Your pets, our priority
CVS Group Plc
Business review - Results by division
Four main business areas
•
•
•
•
Veterinary practices
Diagnostic laboratories
Pet Crematoria
Online dispensary
Turnover by business area
1.0 4.9
9.8
Practices
Labs
Crematoria
108.0
www.cvsgroupplc.com
Animed direct
11
CVS Group Plc
Year ended
30 June 2013
Results by division
Your pets, our priority
Practices
Laboratories
Crematoria
Animed
Direct
Head
Office
Group
108.0
9.8
1.0
4.9
(3.6)
120.1
EBITDA (£m)
20.1
1.1
0.5
0.2
(5.4)
16.5
Gross Margin %
84.9
79.2
82.0
18.8
-
34.9
EBITDA %
18.6
11.2
50.0
4.1
-
13.7
Practices
Laboratories
Crematoria
Animed
Direct
Head
Office
Group
Revenue (£m)
98.8
9.1
0.9
3.0
(3.1)
108.7
EBITDA (£m)
18.6
1.1
0.4
0.1
(4.5)
15.7
Gross Margin %
85.0
80.5
80.2
18.8
-
36.0
EBITDA %
18.8
12.1
44.4
3.3
-
14.4
Revenue (£m)
Year ended
30 June 2012
www.cvsgroupplc.com
12
Your pets, our priority
CVS Group Plc
Business review - Veterinary practices
5 Year revenue £m
120
100
93.8
80
60
98.8
69.6
108.0
79.1
40
20
0
2009
2010
2011
2012
2013
5 year EBITDA £m
25
20
15
14.4
15.9
17.7
18.6
2011
2012
20.1
10
5
0
2009
2010
www.cvsgroupplc.com
2013
13
Your pets, our priority
CVS Group Plc
Business review – Veterinary practices
Practices acquired
252 surgeries across the UK
• 14 acquired during the year
• 7 acquired since the year end
During the year
Location
Carmarthen Veterinary
Centre
Carmarthen
Stow Veterinary Surgeons
Stow-on-the-Wold
Dam Vets
Selby
Cranmore Veterinary
Services
Chester
Archway Veterinary Practice
Petersfield
Alver
Gosport
Filham Park
Ivybridge
Post year end:
www.cvsgroupplc.com
Crescent Veterinary Clinic
Melton Mowbray
Miller & Swann
Elgin
Westmount Vets Limited
Halifax
14
Your pets, our priority
CVS Group Plc
Business review – Veterinary practices
Referrals
• Professor John Innes joined 1st July 2013
• Cranmore referral centre acquired January 2013
• Grove referrals was refurbished during the year and installed a new
CT scanner
• A number of other practices equipped with digital X-Ray equipment
www.cvsgroupplc.com
15
CVS Group Plc
Your pets, our priority
Business review – Veterinary practices
Out of Hours services
• Dedicated in house services established at Emmview in July
2013
• Exeter – internal and external work
• Sales of over £10k per week
• More planned to be established later in the year
www.cvsgroupplc.com
16
Your pets, our priority
CVS Group Plc
Business review – Veterinary practices
Healthy Pet Club
• 70% increase in membership to 111,900
• HPC revenue over 9% of divisional total
• Continue to seek to expand the offer 120,000
and develop new schemes
100,000
HPC membership numbers
111,916
80,000
65,490
60,000
40,000
20,000
28,390
17,234
0
2010
www.cvsgroupplc.com
2011
2012
2013
17
Your pets, our priority
CVS Group Plc
Business review – Veterinary practices
Own Brand
•
High quality products
•
•
•
•
Two products now in use
Distributed via Animed Direct
Several more in development
Better prices and better margins
Practice on-line sites
•
•
•
•
11 now operational
Animed Direct platform used
More in process now we have better understanding
Increasing focus on advertising through the internet
Pet Medic Recruitment
• Now providing 70% of locum requirements
• Saving costs & getting better quality
• Some permanent hires and third party work
www.cvsgroupplc.com
18
Your pets, our priority
CVS Group Plc
Business review – Veterinary practices
Practice management systems
• 70% of surgeries are now using the Robovet system
• Remaining 30% to be migrated by September 2014
• Central database being developed to download data from all practices
– Improved analysis
– Improve processes and efficiency
– Allow smoother growth
People
• Significant investment and increased focus on training and
continued professional development for all staff
• 42 Senior managers put through Aspirational Leadership
Programme
• 32 graduate vets recruited and trained
• 30 Vets on Advanced Practitioner Programme
www.cvsgroupplc.com
19
Your pets, our priority
CVS Group Plc
Business review - Laboratories
5 year revenue £m
12
10
8
8.3
7.9
2009
2010
6
8.6
9.1
9.8
4
2
0
2012
2013
5 year EBITDA £m
1.6
1.4
1.2
2011
1.3
1
1.1
1.0
0.8
1.1
1.1
2012
2013
0.6
0.4
www.axiomvetlab.co.uk
www.finnpathologists.co.uk
www.greendale.co.uk
0.2
0
2009
2010
www.cvsgroupplc.com
2011
20
Your pets, our priority
CVS Group Plc
Business review – Laboratories
• Sales increased by 7.6% to £9.8m
• Continued margin pressure from competition
• Courier routes expanded in 2012 providing further opportunity for
sales growth
150000
2010
2011
296,778
279,567
200000
251,739
250000
276,410
300000
324,335
350000
100000
Number of laboratory tests performed
Consistently increasing
50000
0
2009
www.cvsgroupplc.com
2012
2013
21
Your pets, our priority
CVS Group Plc
Business review – Laboratories
• Weybread site outgrown, resulting in part of the business moving to
Harleston in Q2
• Laboratories to supply in-house analysers to all practices from Q2
26%
Internal vs Externals
sales
74%
www.cvsgroupplc.com
Internal
sales
External
sales
22
Your pets, our priority
CVS Group Plc
Business review - Animed Direct
6.0
3 year revenue £m
5.0
4.9
4.0
3.0
3.0
2.0
1.0
0.0
0.9
2011
2012
2013
3 year EBITDA £m
0.25
0.2
0.15
0.1
0.05
0.0
0.1
0.2
2011
2012
2013
www.animeddirect.co.uk
0
www.cvsgroupplc.com
23
Your pets, our priority
CVS Group Plc
Business review – Animed Direct
• Good sales growth and positive cash contribution
Number of product lines
Average order value
Orders placed per day
No of customers
2011
2012
2013
2,700
3,900
4,200
£27.14
£27.78
£28.34
120
410
650
19,000
56,000
130,000
• Conversion rate 21%
• Started to sell in Europe
• Plans to translate website into 5
European languages
www.cvsgroupplc.com
24
Your pets, our priority
CVS Group Plc
Business review - Crematoria
5 year revenue £m
1.2
5 year EBITDA £m
0.6
1.0
1.0
0.8
0.9
0.5
0.4
0.8
0.6
0.5
0.7
0.4
0.3
0.4
0.2
0.4
0.2
0.1
0.0
0.3
0.3
2010
2011
0.2
0
2009
2010
www.cvsgroupplc.com
2011
2012
2013
2009
2012
2013
25
CVS Group Plc
Your pets, our priority
Business review – Crematoria
•
•
Duncan Francis recruited in 2012 as Director of Crematoria
Continued development and efficiencies at Rossendale
Valley Pet Crematorium
•
•
•
•
Acquired in December 2012
Expanded and new cremator added in July 2013
Internal refurbishment work underway
All local CVS practices now using Valley
www.cvsgroupplc.com
26
CVS Group Plc
Your pets, our priority
Business review – MiVetClub
•
•
•
•
Launched August 2013
First customer sales expected to start in October
Good interest being seen
Offering:
–
–
–
–
–
Buying power through NVS
Laboratories
Crematoria
Pet Medic Recruitment
Health & Safety
www.cvsgroupplc.com
www.mivetclub.co.uk
27
CVS Group Plc
Your pets, our priority
Business review – Central administration
• Costs include central management and Practice divisional
management
• Costs rose from 4.2% of sales to 4.5% in the period
• Investment during the year in:
– MiVetClub
– Pet Medic Recruitment
– Own Brand
– New payroll and HR system
www.cvsgroupplc.com
28
Your pets, our priority
CVS Group Plc
Financial results -Profit & loss
Revenue
Cost of sales
Gross profit
Administrative expenses
Operating profit
Net finance expenses
Exceptional finance expense
Profit before income tax
Income tax expense
Profit after income tax
Earnings per ordinary share
- Basic
- Adjusted
Dividend
www.cvsgroupplc.com
Year ended
30 June 2013
£'m
120.1
(78.2)
41.9
(35.2)
6.7
(1.2)
5.5
Year ended
30 June 2012
£'m
108.7
(69.6)
39.1
(32.3)
6.8
(1.5)
(1.5)
3.8
(1.5)
4.0
(0.9)
2.9
7.1p
16.9p
2.0p
5.1p
15.8p
1.5p
29
Your pets, our priority
CVS Group Plc
Financial results –Balance sheet
30 June 2013 30 June 2012
£'m
£'m
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Deferred income tax assets
Current assets
Inventories
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities
Trade and other payables
Current income tax liabilities
Borrowings
Non-current liabilities
Borrowings
Deferred income tax liabilities
Derivative financial instruments
Total liabilities
Net assets
www.cvsgroupplc.com
53.5
11.4
0.1
0.6
65.6
52.5
9.5
0.1
0.5
62.6
3.5
12.4
5.8
21.7
3.2
9.1
4.9
17.2
87.3
79.8
(21.6)
(0.9)
(2.2)
(24.7)
(17.5)
(1.0)
0.0
(18.4)
(33.6)
(4.1)
(0.2)
(37.9)
(35.8)
(4.8)
(0.4)
(41.0)
(62.6)
(59.5)
24.7
20.3
30
Your pets, our priority
CVS Group Plc
Financial results – Cash flow
Year ended
30 June 2013
£'m
Year ended
30 June 2012
£'m
16.7
(2.1)
(1.2)
15.6
(2.0)
(1.2)
13.4
(1.6)
10.8
Cash flows from investing activities
Capital expenditure - acquisitions
Capital expenditure - other
Net cash used in investing activities
(7.7)
(4.1)
(11.8)
(3.8)
(3.6)
(7.4)
Cash flows from financing activities
Dividend paid
(0.8)
(0.5)
Proceeds from issure of Ordinary shares
Loan financing
Net cash from financing activities
0.1
(0.7)
(1.2)
(1.7)
0.9
4.9
5.8
1.7
3.2
4.9
Cash flows from operating activities
Cash generated from operations
Taxation paid
Net interest paid
Exceptional finance expense in relation to hedge
termination
Net cash generated from operating activities
Net increase in cash and cash equivalents
Cash and cash equivalents at start of period
Cash and cash equivalents at end of period
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31
Your pets, our priority
CVS Group Plc
Financial results – Capital expenditure
Capital expenditure
Refurbishments
£0.5
Total capital expenditure in the
year amounted to £4.1m
•
£0.5
£1.7
£1.4
Improving and
maintaining
equipment
IT systems
development
•
Motor vehicles
•
Practice refurbishments at the Grove
in Fakenham, Regans in Manchester
and Pet Doctors in both Chichester
and Seaford
New CT scanner installed at the
Grove
Digital X-ray equipment installed in a
number of practices
Significant capital expenditure items planned for 2014:
• In-house analysers for the practices
• Robovet rollout and corporate solution
www.cvsgroupplc.com
32
Your pets, our priority
CVS Group Plc
Financial results – Net debt
Net debt
45.0
• Continued reduction in net debt
40.0
35.0
• New £10m Revolving Credit
Facility now available
£m
30.0
41.9
33.5
25.0
Net debt: EBITDA
30.9
30.0
Jun-12
Jun-13
20.0
Jun-10
Jun-11
3.50
3.21
Ratio
3.00
2.50
• £0.8m of £36m loan to be
repaid by December 2013
2.31
1.98
2.00
1.82
1.50
1.00
Jun-10
Jun-11
www.cvsgroupplc.com
Jun-12
Jun-13
33
Your pets, our priority
CVS Group Plc
Outlook
Existing Business
•
•
•
Continued development of out of hours and referral services
Growth and development of customer loyalty schemes
Expansion of E-Commerce in the UK and overseas
Growth through selective acquisitions
•
•
•
Continue to acquire practices, laboratories and crematoria to further strengthen
geographical coverage
Large opportunity with only 11% market share in small animal sector
Further growth opportunities in large animal and equine sector
Finance
•
•
Continuing to maintain strong cash flow and healthy balance sheet
Further investment in core business activities
www.cvsgroupplc.com
34
Your pets, our priority
CVS Group Plc
Appendices
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35
Your pets, our priority
CVS Group Plc
Overview
• UK’s largest National operator
and consolidator of veterinary
practices
• Market leader, making CVS the
acquirer of choice
• Consistent growth in a more
challenging environment
• Complementary businesses to
build on internalise margins and
maximising revenues
www.cvsgroupplc.com
2,500 employees
560
vets
247
Surgeries nationwide
5
Diagnostics laboratories
2
crematoria
1
On-line dispensary
36
Your pets, our priority
CVS Group Plc
EBITDA Margin analysis
2009
£m
Year ended 30 June
2010
2011
2012
£m
£m
£m
2013
£m
Revenue
76.6
85.5
101.5
108.7
120.1
EBITDA
12.5
13.1
14.5
15.7
16.5
%
%
%
%
%
- Group
40.4
37.2
36.1
36.0
34.9
-Practices
83.7
84.7
84.8
85.0
84.9
-
27.2
18.8
18.8
% of sales
Gross margin
-Animed Direct
-
-Laboratories
68.6
70.5
79.6
80.5
79.2
-Crematorium
90.2
86.4
81.7
80.2
82.0
Central
administration
4.4
5.0
4.4
4.2
4.5
16.3
15.3
14.3
14.4
13.9
EBITDA margin (%)
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37
Your pets, our priority
CVS Group Plc
Debt repayment profile
Period End
Repayment
Balance
£m
£m
31 December 2011
December 2013
March 2014
June 2014
36.00
0.75
0.75
0.75
30 June 2014
33.75
September 2014
December 2014
March 2015
June 2015
0.75
1.00
1.00
1.00
30 June 2015
(3.75)
30.00
September 2015
December 2015
March 2016
June 2016
1.00
1.00
1.00
1.00
30 June 2016
(4.00)
26.00
September 2016
December 2016
6 December 2016
www.cvsgroupplc.com
(2.25)
1.00
25.00
(26.00)
0.00
38
Your pets, our priority
CVS Group Plc
Cash generated from operations
Year ended
30 June 2013
£'m
Year ended
30 June 2012
£'m
Profit for the year
4.0
2.9
Taxation
1.5
0.9
Total finance costs
1.2
3.0
Amortisation of intangible assets
6.2
5.7
Depreciation of property, plant and equipment
2.5
2.3
Contingent deferred consideration expensed in the year
0.1
0.2
(Increase) in inventories
(0.1)
(0.4)
(Increase) in trade and other receivables
(3.2)
(1.2)
Increase in trade and other payables
3.8
1.6
Share option expense
0.7
0.6
16.7
15.6
Total cash flows from operating activities
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39
Your pets, our priority
CVS Group Plc
Bank covenants
• The key financial banking covenants are:
Covenant
Details
Ratio required
Cash flow cover
Cash flow available
for debt service:
total finance
payments
At least 1.0:1
5.73
Must not exceed
3.0:1
1.82
Senior debt/EBITDA
Senior interest
cover
EBITDA / Senior
interest paid
At least 4.5:1
30 June 2013
(unaudited)
14.39
• Banking covenants are tested on a 12 month rolling basis
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40
CVS Group Plc
Your pets, our priority
Our locations
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41
CVS Group Plc
Your pets, our priority
Adjusted items definitions
• Adjusted EBITDA is profit before income tax, net finance
expense, depreciation, amortisation, costs relating to business
combinations and share option expense.
• Adjusted profit before income tax is calculated as profit
on ordinary activities before taxation but before costs relating
to business combinations, costs of long term incentive plans
and exceptional items.
• Adjusted earnings per share is calculated as profit on
ordinary activities after taxation but before costs relating to
business combinations, costs of long term incentive plans,
exceptional items and amortisation (all net of tax) divided by
the weighted average number of Ordinary shares in issue in
the year.
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42