Chairman's statement 24 September 2013
Results
I am very pleased to report that CVS has made significant progress in all areas of the business
during the year. All divisions delivered organic growth and this was enhanced by further
acquisitions. We continued to invest in the development of our services, our staff and our
premises, providing improved customer service. Revenue grew by 10.4% to £120.1m (2012:
£108.7m) and like-for-like sales increased by 3.4%. Adjusted EBITDA increased by 5.5% to
£16.5m (2012: £15.7m). Operating profit fell marginally to £6.7m (2012: £6.8m) due to
higher acquisition and amortisation costs, the benefits of which will be generated in future
years. Adjusted EPS grew by 7.0% to 16.9p (2012: 15.8p) and cash generated from
operations increased to £16.7m (2012: £15.6m).
Business initiatives
We continued to invest carefully in acquisitions. During the year we spent £7.7m to acquire
14 surgeries, through the acquisition of 7 practices, and our second crematorium. Subsequent
to the year end we made three further acquisitions of Crescent Veterinary Clinic in Melton
Mowbray, Miller & Swann in Elgin and West Mount Vets Limited (5 surgeries) in and
around Halifax. On 20 September 2013 we signed an additional £10m borrowing facility.
This provides the capacity to develop the Group further through acquisitions but is at a level
that will not put undue pressure on our balance sheet. Further details are set out in the
Finance Review. The Group progressed many important initiatives during 2013. The 70%
growth of our Healthy Pet Club scheme to over 111,900 members is particularly pleasing and
drove continued likefor- like sales growth in our Veterinary Practices. We invested over £4m
in our premises and equipment, including the complete refurbishment of our Grove premises
and the acquisition of a CT scanner to improve our diagnostic capability. Animed Direct
increased sales by 62% and has begun to make initial sales into Europe. All of these
initiatives help strengthen the Group for the future.
Our people
Importantly, we continued to focus on the development of our staff and now have an industry
leading new graduate scheme and a leadership programme for more senior staff. The Group
remains the largest employer in the UK veterinary profession with approximately 2,500 staff
today, including around 560 vets. Our people are our most important asset and enable the
Group to deliver its strategy. I would like to thank them all, including those new to CVS, for
their expertise and professionalism in providing the best possible veterinary care and service.
Dividends
The company proposes to pay a dividend of 2.0p per share in December 2013 - a 33%
increase on the 1.5p per share paid in 2012. With a strong pipeline of acquisitions, the Board
believe that shareholder value can best be grown by reinvesting the majority of operational
cash flow back into the business. However, having established our market leading presence,
the business can also support a meaningful increase in the level of dividend. If approved at
the Annual General Meeting, the dividend will be paid on 20 December 2013 to shareholders
on the register on 6 December 2013. The ex-dividend date will be 4 December 2013.
Board changes
David Timmins and Paul Coxon left the Group during the year. Both had given many years
of valuable service to the Group and I wish them both well in their future endeavours. Nick
Perrin joined as Finance Director and Mike McCollum as a non-executive Director and I am
pleased with the contributions that both have made in their early days. Following the
resignation of Paul Coxon, Rebecca Cleal, our inhouse solicitor, was appointed as Company
Secretary.
Outlook
The outlook for CVS is promising with some tentative signs of a return to more favourable
market conditions. The initiatives we progressed in 2013 will serve us well in the current
financial year, leading to further growth in all divisions. Subsequent to the year end we
launched our first MiPet, own brand, product and MiVetClub, our buying group. Whilst these
initiatives are currently small we believe that they have great potential to build further on the
strengths of the Group. The Board remains cautiously optimistic about the Group's future and
estimates that CVS only has an 11% share of the UK small animal veterinary market. This
demonstrates the major opportunity for further growth and consolidation and we expect to
make further practice acquisitions.
Richard Connell - Non-excutive Chairman