CVS Group plc · LSE:CVSG
CVS — FY2013 Earnings Presentation
42 slides from CVS's earnings presentation, September 2013
Slide 1: Annual results for the year ended 30 June 2013
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
Slide 2: Agenda
CVS Group Plc Your pets, our priority Agenda • Highlights • Strategy • Business review – Practices – Laboratories – Animed Direct – Crematoria – MiVetClub • Financial review • Appendices www.cvsgroupplc.com 2
Slide 3: Highlights
CVS Group Plc Your pets, our priority Highlights Year ended Year ended 30 June 2013 30 June 2012 Increase % Revenue (£m) 120.1 108.7 10.4 Adjusted EBITDA (£m) 16.5 15.7 5.5 Adjusted profit before income tax (£m) 6.6 6.2 5.7 Adjusted earnings per share (pence) 16.9 15.8 7.0 Operating profit (£m) 6.7
Slide 4: Highlights
CVS Group Plc Your pets, our priority Highlights Sales 140 120 Revenue Growth up 10.4% to £120.1m 100 Like-for-like sales +3.4% £m 80 60 108.7 120.1 101.5 40 76.6 85.5 20 0 EBITDA 2009 2010 2011 2012 2013 20 15 Adjusted EBITDA up 5.5% to £16.5m Acquired and integrated 14 surgeries £m 10 14.5 15.7 16
Slide 5: Highlights
CVS Group Plc Your pets, our priority Highlights CVS 70 Companion Care CVS owns 252 surgeries and is the largest 47 247 and Vets4pets provider of Veterinary services to Pet owners 92 Medivet in the UK Goddards HPC membership numbers 204 Independent 120,000 111,916 Vetcare 100,000 80,000 65,490 60,00
Slide 6: Strategy
CVS Group Plc Your pets, our priority Strategy Our vision Our strategy Outcome Meeting all our customers’ needs To continue to be the largest & best provider High quality clinical of veterinary services care and excellent customer service Growing the return to to pet owners in the shareholders UK wh
Slide 7: Strategy: Meeting all our customers' needs
CVS Group Plc Your pets, our priority 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
Slide 8: Strategy: Excellent customer service
CVS Group Plc Your pets, our priority 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 hi
Slide 9: Strategy: Services to other practices and acquisitions
CVS Group Plc Your pets, our priority Strategy Providing services to other veterinary practices • MiVetClub, buying group, launched August 2013 Number of surgeries 300 Expanding through acquisitions 250 200 • Further small animal practices 150 100 211 223 231 252 168 • Additional opportunities in eq
Slide 10: Strategy: Growing our share price
CVS Group Plc Your pets, our priority Strategy Price (p) 300 250 Growing our share price 200 150 100 50 2008 2009 2010 2011 2012 Total shareholder return 0 -10 Increasing shareholder return -20 -30 -40 -50 -60 -70 -80 2008 2009 2010 2011 2012 www.cvsgroupplc.com 10
Slide 11: Business review - Results by division
CVS Group Plc Your pets, our priority Business review - Results by division Four main business areas • Veterinary practices Turnover by business area • Diagnostic laboratories 1.0 4.9 • Pet Crematoria 9.8 Practices • Online dispensary Labs Crematoria Animed direct 108.0 www.cvsgroupplc.com 11
Slide 12: Results by division
CVS Group Plc Your pets, our priority Results by division Year ended Practices Laboratories Crematoria Animed Head Group 30 June 2013 Direct Office Revenue (£m) 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
Slide 13: Business review - Veterinary practices
CVS Group Plc Your pets, our priority Business review - Veterinary practices 5 Year revenue £m 120 100 108.0 98.8 80 93.8 79.1 60 69.6 40 20 0 2009 2010 2011 2012 2013 5 year EBITDA £m 25 20 20.1 17.7 18.6 15 15.9 14.4 10 5 0 2009 2010 2011 2012 2013 www.cvsgroupplc.com 13
Slide 14: Business review – Veterinary practices
CVS Group Plc Your pets, our priority Business review – Veterinary practices Practices acquired 252 surgeries across the UK During the year Location Carmarthen Veterinary Carmarthen • 14 acquired during the year Centre Stow Veterinary Surgeons Stow-on-the-Wold • 7 acquired since the year end Dam Vet
Slide 15: Veterinary practices: Referrals
CVS Group Plc Your pets, our priority 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
Slide 16: Veterinary practices: Out of Hours services
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.
Slide 17: Veterinary practices: Healthy Pet Club
CVS Group Plc Your pets, our priority Business review – Veterinary practices Healthy Pet Club • 70% increase in membership to 111,900 • HPC revenue over 9% of divisional total HPC membership numbers • Continue to seek to expand the offer 120,000 111,916 and develop new schemes 100,000 80,000 65,490
Slide 18: Veterinary practices: Own brand, online sites, recruitment
CVS Group Plc Your pets, our priority 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 platfo
Slide 19: Veterinary practices: Management systems and people
CVS Group Plc Your pets, our priority 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 – I
Slide 20: Business review - Laboratories
CVS Group Plc Your pets, our priority Business review - Laboratories 12 5 year revenue £m 10 9.8 8 9.1 8.3 8.6 7.9 6 4 2 0 2009 2010 2011 2012 2013 1.6 5 year EBITDA £m 1.4 1.2 1.3 www.axiomvetlab.co.uk www.finnpathologists.co.uk 1 1.1 1.1 1.1 0.8 1.0 0.6 0.4 www.greendale.co.uk 0.2 0 2009 2010 2011
Slide 21: Business review – Laboratories
CVS Group Plc Your pets, our priority 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 350000 300000 324,335 296,778 250000 279,567 276,410 251,739 200000 Nu
Slide 22: Business review – Laboratories
CVS Group Plc Your pets, our priority 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 Internal sales sales External sales 74% www.cvsgro
Slide 23: Business review - Animed Direct
CVS Group Plc Your pets, our priority Business review - Animed Direct 6.0 3 year revenue £m 5.0 4.9 4.0 3.0 3.0 2.0 1.0 0.9 0.0 2011 2012 2013 3 year EBITDA £m 0.25 0.2 0.15 0.1 0.05 0.0 0.1 0.2 www.animeddirect.co.uk 0 2011 2012 2013 www.cvsgroupplc.com 23
Slide 24: Business review – Animed Direct
CVS Group Plc Your pets, our priority Business review – Animed Direct • Good sales growth and positive cash contribution 2011 2012 2013 Number of product lines 2,700 3,900 4,200 Average order value £27.14 £27.78 £28.34 Orders placed per day 120 410 650 No of customers 19,000 56,000 130,000 • Convers
Slide 25: Business review - Crematoria
CVS Group Plc Your pets, our priority Business review - Crematoria 5 year revenue £m 1.2 5 year EBITDA £m 0.6 1.0 1.0 0.5 0.8 0.9 0.5 0.4 0.8 0.6 0.4 0.7 0.3 0.3 0.3 0.4 0.2 0.4 0.2 0.2 0.1 0.0 0 2009 2010 2011 2012 2013 2009 2010 2011 2012 2013 www.cvsgroupplc.com 25
Slide 26: Business review – Crematoria
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 refurbis
Slide 27: Business review – MiVetClub
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 www.mivetclub.co.uk – Pet Medic Recruitment – Health & Safety www
Slide 28: Business review – Central administration
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 an
Slide 29: Financial results - Profit & loss
CVS Group Plc Your pets, our priority Financial results -Profit & loss Year ended Year ended 30 June 2013 30 June 2012 £'m £'m Revenue 120.1 108.7 Cost of sales (78.2) (69.6) Gross profit 41.9 39.1 Administrative expenses (35.2) (32.3) Operating profit 6.7 6.8 Net finance expenses (1.2) (1.5) Except
Slide 30: Financial results – Balance sheet
CVS Group Plc Your pets, our priority Financial results –Balance sheet 30 June 2013 30 June 2012 £'m £'m Non-current assets Intangible assets 53.5 52.5 Property, plant and equipment 11.4 9.5 Investments 0.1 0.1 Deferred income tax assets 0.6 0.5 65.6 62.6 Current assets Inventories 3.5 3.2 Trade and
Slide 31: Financial results – Cash flow
CVS Group Plc Your pets, our priority Financial results – Cash flow Year ended Year ended 30 June 2013 30 June 2012 £'m £'m Cash flows from operating activities Cash generated from operations 16.7 15.6 Taxation paid (2.1) (2.0) Net interest paid (1.2) (1.2) Exceptional finance expense in relation to
Slide 32: Financial results – Capital expenditure
CVS Group Plc Your pets, our priority Financial results – Capital expenditure Capital expenditure Total capital expenditure in the Refurbishments £0.5 year amounted to £4.1m • Practice refurbishments at the Grove £0.5 £1.7 Improving and in Fakenham, Regans in Manchester maintaining equipment and Pet
Slide 33: Financial results – Net debt
CVS Group Plc Your pets, our priority Financial results – Net debt Net debt 45.0 • Continued reduction in net debt 40.0 35.0 • New £10m Revolving Credit £m 30.0 41.9 Facility now available 33.5 25.0 30.9 30.0 Net debt: EBITDA 20.0 Jun-10 Jun-11 Jun-12 Jun-13 3.50 3.21 3.00 • £0.8m of £36m loan to be
Slide 34: Outlook
CVS Group Plc Your pets, our priority 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, l
Slide 35: Appendices
CVS Group Plc Your pets, our priority Appendices www.cvsgroupplc.com 35
Slide 36: Overview
CVS Group Plc Your pets, our priority Overview • UK’s largest National operator 2,500 employees and consolidator of veterinary practices 560 vets • Market leader, making CVS the acquirer of choice 247 Surgeries nationwide • Consistent growth in a more challenging environment 5 Diagnostics laboratori
Slide 37: EBITDA Margin analysis
CVS Group Plc Your pets, our priority EBITDA Margin analysis Year ended 30 June 2009 2010 2011 2012 2013 £m £m £m £m £m Revenue 76.6 85.5 101.5 108.7 120.1 EBITDA 12.5 13.1 14.5 15.7 16.5 % of sales % % % % % Gross margin - Group 40.4 37.2 36.1 36.0 34.9 -Practices 83.7 84.7 84.8 85.0 84.9 -Animed D
Slide 38: Debt repayment profile
CVS Group Plc Your pets, our priority Debt repayment profile Period End Repayment Balance £m £m 31 December 2011 36.00 December 2013 0.75 March 2014 0.75 June 2014 0.75 (2.25) 30 June 2014 33.75 September 2014 0.75 December 2014 1.00 March 2015 1.00 June 2015 1.00 (3.75) 30 June 2015 30.00 September
Slide 39: Cash generated from operations
CVS Group Plc Your pets, our priority Cash generated from operations Year ended Year ended 30 June 2013 30 June 2012 £'m £'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 Contin
Slide 40: Bank covenants
CVS Group Plc Your pets, our priority Bank covenants • The key financial banking covenants are: Covenant Details Ratio required 30 June 2013 (unaudited) Cash flow cover Cash flow available At least 1.0:1 5.73 for debt service: total finance payments Senior debt/EBITDA Must not exceed 1.82 3.0:1 Seni
Slide 41: Our locations
CVS Group Plc Your pets, our priority 41 Our locations www.cvsgroupplc.com
Slide 42: Adjusted items definitions
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 a