CVS Group plc · LSE:CVSG
CVS — FY2011 Earnings Presentation
26 slides from CVS's earnings presentation, September 2011
Slide 1: CVS Group plc Full Year Results
CVS Group plc Full Year Results 30 June 2011 September 2011
Slide 2: Highlights
Highlights Revenue growth + 18.7% Like for Like Sales + 0.4% EBITDA (adjusted) + 11.1% EPS (adjusted) + 17.6% £17.6m of cash generated from operations + 39.7% Net debt reduction of £8.4m during the year Acquisition growth comprising 12 surgeries during the year. A further surgery has been purchased
Slide 3: Results - Profit & Loss
Results - Profit & Loss Year ended Year ended • Revenue growth +18.7%, mainly acquisitions 30 June 30 June 2011 2010 • 0.4% like for like sales increase £'000 £'000 • Slight fall in gross profit margins: Revenue 101,491 85,527 COS Emp Costs GP Cost of sales (64,817) (53,696) FY 10/11 17.6% 46.2% 36.
Slide 4: Results - Cashflow
Results - Cashflow Year ended Year ended 30 June 30 June 2011 2010 £'000 £'000 Cash flows from operating activities • Significant increase in cash generation Cash generated from operations 17,639 12,624 from operations at +39.7%. See slide 22 Taxation paid (1,267) (1,907) Interest received 24 29 for
Slide 5: Results - Balance Sheet
Results - Balance Sheet 30 June 30 June 2011 2010 £'000 £'000 • Significant reduction in net debt of £8.4m: Non-current assets -June 2011 £33.5m Intangible assets 54,486 56,695 -June 2010 £41.9m Property, plant and equipment 8,465 8,835 Investments 77 74 • Debt facilities of £46m Deferred income tax
Slide 6: Practices – Overview
Practices – Overview Revenue generation of £94.7m (93.3% of Group total) and £17.7m of adjusted EBITDA (increase of £1.8m compared to 2009/2010) The 222 small animal and 1 equine surgery offer a full range of veterinary services including referral expertise from a number of sites Core element of the
Slide 7: Practices – Revenue Analysis
Practices – Revenue Analysis •Like for like sales growth of 0.5% (£0.5m revenue) • Footfall remains constant • Average price increases fees + 2% drugs + 3% • Average transaction value decrease – 1% • Product purchase volumes Prescription medicines decline by 1% Veterinary diet decline by 11% Average
Slide 8: Practices – Customer loyalty schemes
Practices – Customer loyalty schemes Key objectives Increase ATV Differentiate from other veterinary practices Bonding clients/loyalty Protect against on-line threat To attain 100% of clients on scheme 4 loyalty schemes now in place, growing significantly Adult Horse (launched in H1) Puppy & Kitten
Slide 9: Practices – Customer loyalty schemes
Practices – Customer loyalty schemes Healthy Pet Club (HPC) clients on average spend a minimum of 15% more than non HPC client HPC revenue (from DD collections) – 2.5% of divisional revenue Pet membership (main scheme) 30th June 2010 17,234 30th June 2011 24,568 31st August 2011 26,019 Pet membershi
Slide 10: Practices – E-Commerce
Practices – E-Commerce On-line Dispensary Animed Direct, our on-line pharmacy, commenced trading at the end of July 2010 General data 3,000 product lines Average order value £33.60 282 orders placed per day (including 67 from Amazon) 23,700 customers Conversion rate 17.7% Turnover – annual equivalen
Slide 11: Practices – E-Commerce
Practices – E-Commerce On-line shops Pet Doctors on-line shop Relaunched shop (post year end) Home delivery Promotions/Marketing Roll out of on-line shops for all CVS practices is planned (4 in the current financial year) 11
Slide 12: Laboratories
Laboratories Laboratories contributed £8.6m of revenue and £1.0m of adjusted EBITDA (decrease of £0.1m compared to 2009/10) The laboratories offer a wide range of diagnostic services including histopathology, microbiology and clinical chemistry 28% of business is intra-group and 72% is for outside c
Slide 13: Crematorium
Crematorium Rossendale Pet Crematorium acquired in October 2008 Internalisation of margin and increased range of service offering Contributed £0.8m of revenue (2010: £0.7m) and £0.3m of adjusted EBITDA (2010: £0.3m) 32% of business is intra-group and 68% is for outside customers High ROIC and substa
Slide 14: Support Services
Support Services Operational management Led by Director of Practice Operations and Director of Clinical Services 11 regional directors sharing management information to drive practice performance and local strategy KPIs to assist decision making – e.g. ATVs, vet productivity etc P&Ls for each practi
Slide 15: Systems Development
Systems Development Central systems development to improve efficiency and reporting Current reporting systems are robust but labour intensive New HPC direct debit system installed Business Intelligence tool has been developed in-house HR and payroll system to be implemented in early 2012 Key benefit
Slide 16: Systems Development
Systems Development Operational systems development to rationalise and standardise One Practice Management System by 2014 One Laboratory System by 2012 Development of a Crematoria system underway Key benefits of systems investment Standardised operations Operating cost savings Facilitates central co
Slide 17: Outlook
Outlook Existing Business Increasing operational efficiencies Customer loyalty schemes E-Commerce Systems Development Growth through selective acquisitions Continue to acquire Practices and Crematoria Large opportunity with still only 10% market share in small animal sector Finance Continuing strong
Slide 18: Appendices
Appendices 18
Slide 19: Overview of CVS
Overview of CVS UK’s largest National operator and consolidator of veterinary practices 2,199 employees Market leading position and reputation making CVS the acquirer of choice 503 vets Consistent delivery of growth year on year, however we continue to experience a more challenging 223 surgeries nat
Slide 20: Vet Surgeries
Vet Surgeries Surgery locations • Wide geographical spread across England • Initial presence in Scotland and Wales • Small animal practices – urban areas • Ripple effect 20
Slide 21: Corporate Owned Surgeries
Corporate Owned Surgeries Corporate ownership currently represents just 23% of small animal surgeries CVS is the only corporate with a strong nationwide presence Corporate owned surgeries 250 223 200 150 95 100 85 71 45 50 Care 0 CVS Medivet Goddards Companion care Vets4Pets Source: Individual busin
Slide 22: Cash generated from operations
Cash generated from operations Year ended Year ended 30 June 30 June 2011 2010 £'000 £'000 Profit for the year 3,487 3,058 Taxation 767 781 Total finance costs 2,128 1,879 Investment income (24) (29) Amortisation of intangible assets 5,348 4,385 Depreciation of property, plant and equipment 2,233 1,
Slide 23: EBITDA Margin Analysis
EBITDA Margin Analysis Year ended 30 June 2007 2008 2009 2010 2011 £m £m £m £m £m Revenue 39.0 62.2 76.6 85.5 101.5 EBITDA 5.1 9.6 12.5 13.1 14.5 % of sales % % % % % Gross margin -Practices 80.4 82.2 83.7 84.7 84.2 -Laboratories 87.2 74.0 68.6 70.5 79.6 -Crematorium 0.0 0.0 90.2 86.4 81.7 Head offi
Slide 24: Debt Repayment Profile
Debt Repayment Profile Year End Repayment Balance £m £m 1 July 2011 36.7 September 2011 1.0 December 2011 1.0 March 2012 1.0 June 2012 1.0 (4.0) 30 June 2012 32.7 September 2012 1.0 December 2012 0.6 March 2013 0.6 June 2013 0.6 (2.8) 30 June 2013 29.9 September 2013 29.9 24
Slide 25: Gearing
Gearing Gearing calculation based on Shareholders' Funds 30/06/2011 30/06/2010 Non-current borrowings 32,777 36,655 Equity shareholders' funds 16,571 12,049 Gearing ratio 197.8% 304.2% 25
Slide 26: Bank Covenants
Bank Covenants The key financial banking covenants are: Debt leverage to net debt must be <4.25 x run rate EBITDA Interest cover to run rate EBITDA must be >3.0 x interest paid Debt service cover to cash generated must be >1 x interest/capital repayments At 30 June 2011 our covenant ratios (unaudite