CVS Group plc · LSE:CVSG
CVS — H1 2012 Earnings Presentation
28 slides from CVS's earnings presentation, March 2012
Slide 1: CVS Group plc Interim Results
CVS Group plc Interim Results 6 months to 31 December 2011 March 2012
Slide 2: Highlights
Highlights Revenue growth + 6.9% Like for Like Sales + 2.1% EBITDA (adjusted) + 9.0% PBT (pre exceptional*) + 25.2% EPS (adjusted) + 23.8% Maiden dividend paid in December 2011 of £0.6m Expect to pay dividend at the full year Net debt reduction of £1.9m since June 2011 New funding
Slide 3: Key Performance Trends
Key Performance Trends June 2007 to June 2011 performance: • Sales increase of 160% (compound annual growth of 27%) • EBITDA increase of 185% (compound annual growth of 30%) 3
Slide 4: Key Performance Trends
Key Performance Trends Significant reduction in net debt: • Dec 11 £31.6m (- 6%) • June 11 £33.5m (-11%) • Dec 10 £37.8m (-10%) • June 10 £41.9m Net debt:EBITDA • Dec 11 2.08 • June 11 2.31 • Dec 10 2.88 • June 10 3.21 Continued delivery of significant revenue and profit growth, combined with substa
Slide 5: Business structure
Business structure The following diagram highlights the current operations undertaken by the Group (shown in black) with potential growth areas as identified in red: Crematorium Locum agency E-Commerce Loyalty Laboratories schemes Veterinary practices Own brand Vet Club products Insurance Referrals
Slide 6: Practices – Overview
Practices – Overview Revenue generation of £50.6m (93.7% of Group total) and £9.1m of EBITDA (increase of £0.5m compared to H1 2010/2011) The 224 small animal and 1 equine surgery offer a full range of veterinary services including referral expertise from a number of sites Principal operating
Slide 7: Practice Division – Customer loyalty schemes
Practice Division – Customer loyalty schemes Customer loyalty scheme payment by direct debit. Client benefits: 2 or 3 health checks per year - free of charge Vaccinations, flea and worming treatments - free of charge 20% off wide range of lifetime care drugs 10% off all other products and
Slide 8: Practice Division – Customer loyalty schemes
Practice Division – Customer loyalty schemes HPC revenue (from DD collections) – 3.8% of divisional revenue Pet membership Adult Puppy/kitten Total 30 June 2011 24,568 3,631 28,199 31 December 2011 27,969 19,779 47,748 8
Slide 9: Practice Division – E-Commerce
Practice Division – E-Commerce Online Dispensary Animed Direct, our online pharmacy, commenced trading end of July 2010 Moved to purpose built premises in October 2011 – room for significant future expansion General data 3,200 product lines Average order value of £24.48 380 orders placed
Slide 10: Practice Division – E-Commerce
Practice Division – E-Commerce Online shops Pet Doctors online shop Relaunched shop Home delivery Promotions/Marketing Planned roll-out of online shops for all CVS practices (4 in current financial year) 10
Slide 11: Laboratories
Laboratories Strong divisional performance in period, like for like sales +4% Laboratories contributed £4.4m of revenue EBITDA £0.7m up 40% (£0.5m H1 2010/2011) Laboratories offer wide range of diagnostic services including histopathology, microbiology and clinical chemistry Intra-group 30
Slide 12: Crematorium (Rossendale)
Crematorium (Rossendale) Delivered £0.4m of revenue (2010: £0.4m) and £0.2m of EBITDA (2011: £0.2m) Intra-group 34%; external 66% High ROIC and substantial group synergies 12
Slide 13: Group Support Services
Group Support Services Strengthening of Central Support Team Loyalty scheme manager IT resource, including enhanced programming capability Locum services manager Enhanced marketing capability Two in-house trainers 13
Slide 14: Systems Development
Systems Development Practices Single Practice Management System – phased upgrades (financed within normal capex budget) 35% of sites at 31 December 2011 45% by 30 June 2012 60% by 31 December 2012 Capex of £0.4m anticipated in 12 months to 31 December 2012 Laboratories and Crematorium Labo
Slide 15: Systems Development
Systems Development Central systems development to improve efficiency and reporting New HPC direct debit system implemented and fully operational Business Intelligence tool now developed HR and payroll system to go live in July 2012 15
Slide 16: Interim Results - Profit & Loss
Interim Results - Profit & Loss Six months Six months Year ended ended ended 31 December 31 December 30 June 2011 2010 2011 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 • Revenue growth +6.9% Revenue 53,976 50,502 101,491 Cost of sales (34,468) (32,431) (64,817) • 2.1% like for like increase
Slide 17: Interim Results - Cashflow
Interim Results - Cashflow Six months Six months Year ended ended ended 31 December 31 December 30 June 2011 2010 2011 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Cash flows from operating activities • Increase in cash position since June 2011 of £1.0m after paying the following amounts; Cas
Slide 18: Interim Results - Balance Sheet
Interim Results - Balance Sheet 31 December 31 December 30 June 2011 2010 2011 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 • Continued reduction in net debt Non-current assets - Dec 11 £31.6m Intangible assets 53,198 55,692 54,486 - Jun 11 £33.5m Property, plant and equipment 8,119 8,597 8,4
Slide 19: Outlook
Outlook Existing Business Increasing operational efficiencies / standardisation Customer loyalty schemes E-Commerce Systems Development Investment in growth initiatives across the business Growth through selective acquisitions Continue to acquire Practices, Laboratories and Crematoria
Slide 20: Appendices
Appendices 20
Slide 21: Overview of CVS
Overview of CVS UK’s largest National operator and consolidator of veterinary practices 2,315 employees Market leading position and reputation making CVS the acquirer of choice 528 vets Consistent delivery of growth year on year, however we continue to experience a more challenging 225 surgeri
Slide 22: Vet Surgeries
Vet Surgeries Surgery locations • Wide geographical spread across England • Initial presence in Scotland and Wales • Small animal practices – urban areas • Ripple effect 22
Slide 23: Corporate Owned Surgeries
Corporate Owned Surgeries Corporate ownership currently represents circa 24% of small animal surgeries CVS is the only corporate with a strong nationwide presence Source: Individual business websites (March 2012) CVS is the recognised national consolidator in the market 23
Slide 24: Cash generated from operations
Cash generated from operations Six months Six months Year ended ended ended 31 December 31 December 30 June 2011 2010 2011 (Unaudited) (Unaudited) (Audited) £'000 £'000 £'000 Profit for the period 954 1,461 3,487 Taxation 170 690 767 Total finance costs 2,418 1,090 2,128 Investment income (15) (10)
Slide 25: EBITDA Margin Analysis
EBITDA Margin Analysis 6 months to 6 months to 2007 2008 2009 2010 2011 31/12/2010 31/12/2011 £m £m £m £m £m £m £m Revenue 39.0 62.2 76.6 85.5 101.5 50.5 54.0 EBITDA 5.1 9.6 12.5 13.1 14.5 7.2 7.8 % of sales % % % % % % % Gross margin -Practices 80.4 82.2 83.7 84.7 84.2 84.3 82.7 -Laboratories 87.2
Slide 26: Debt Repayment Profile
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 2015 1.00 December 2015 1.00 March 20
Slide 27: Bank Covenants
Bank Covenants The key financial banking covenants are: Covenant Details Ratio Actual – 31 requirement December 2011 (unaudited) Cashflow Cashflow available At least 1.0:1 2.70 cover for debt service: total finance payments Senior debt / Must not exceed 2.17 EBITDA 3.0:1 Senior EBITDA / Senior At
Slide 28: Bank refinancing
Bank refinancing Improved banking facilities with RBS were signed on 6 December 2011: £36m term loan £4m overdraft Capital repayments commence December 2013 Arrangement fees of £289k have been capitalised and will be amortised over the term of the loan Hedging arrangements New arrangement