CVS Group plc · LSE:CVSG
CVS — FY2014 Earnings Presentation
36 slides from CVS's earnings presentation, September 2014
Slide 1: Annual results for the year ended 30 June 2014
CVS Group plc Annual results for the year ended 30 June 2014 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 2014 30 June 2013 Increase % Revenue (£m) 142.9 120.1 19.0 Adjusted EBITDA (£m) 19.7 16.5 19.7 Adjusted profit before income tax (£m) 14.3 6.6 17.5 Adjusted earnings per share (pence) 19.0 16.2 17.3 Operating profit (£m)
Slide 4: Highlights
CVS Group Plc Your pets, our priority Highlights Sales 160 140 Revenue Growth up 19.0% to £142.9m 120 100 Like-for-like sales +6.9% 80 142.9 60 108.7 120.1 101.5 40 85.5 20 0 25 EBITDA 2010 2011 2012 2013 2014 20 15 Adjusted EBITDA up 19.7% to £19.7m 10 16.5 19.7 Acquired and integrated 18 surgeries
Slide 5: Highlights
CVS Group Plc Your pets, our priority Highlights CVS 122 Companion Care CVS owns 268 surgeries and is the largest 48 268 and Vets4pets provider of Veterinary services to Pet owners Medivet in the UK 119 Goddards HPC membership numbers 293 Independent 180,000 162,000 Vetcare 160,000 140,000 111,916 1
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: Business review - Results by division
CVS Group Plc Your pets, our priority Business review - Results by division Turnover by business area £m Four main business areas 10.6 1.6 8.5 • Veterinary practices Practices Labs • Diagnostic laboratories Crematoria • Pet Crematoria Animed direct 126.4 • Online dispensary % of Turnover per Busines
Slide 8: Results by division
CVS Group Plc Your pets, our priority Results by division Year ended Practices Laboratories Crematoria Animed Head Group 30 June 2014 Direct Office Revenue (£m) 126.4 10.6 1.6 8.5 (4.2) 142.9 EBITDA (£m) 24.7 1.3 0.5 0.3 (7.1) 19.7 Gross Margin 84.6 75.2 80.1 16.4 - 32.6 after materials % EBITDA % 1
Slide 9: Business review - Veterinary practices
CVS Group Plc Your pets, our priority Business review - Veterinary practices 150 5 Year revenue £m 126.4 100 108.0 93.8 98.8 79.1 50 0 2010 2011 2012 2013 2014 Practice revenue split 2014 2013 £m £m 30 5 year EBITDA £m Like-for-like revenue 108.3 103.8 2013 acquisitions 11.6 4.2 24.7 20 2014 acquisi
Slide 10: Business review - Veterinary practices: acquisitions
CVS Group Plc Your pets, our priority Business review – Veterinary practices 268 surgeries across the UK Practices acquired • 18 acquired during the year During the year Location Business Crescent Veterinary Clinic Melton Mowbray Small animal, large • 6 acquired since the year end animal and equine
Slide 11: Business review - Veterinary practices: referrals
CVS Group Plc Your pets, our priority Business review – Veterinary practices Referrals • Professor John Innes joined 1st July 2013 • Two additional diploma holders recruited in the year with specialisms in cardiology and small animal surgery • In July 14 we acquired Lumbry Park in Alton, which we ai
Slide 12: Business review - Veterinary practices: own brand and out-of-hours
CVS Group Plc Your pets, our priority Business review – Veterinary practices Own Brand • High quality products • Five products now in use • Distributed via Animed Direct • Several high volume products in development for launch in early 2015 (prescription medicines and waiting room retail) • Lower pr
Slide 13: Business review - Veterinary practices: Healthy Pet Club
CVS Group Plc Your pets, our priority Business review – Veterinary practices Healthy Pet Club • Over 45% increase in membership to 162,000 • New system implemented allowing online sign up of customers • HPC revenue 11.8% of total revenue (2013: 8.0%) • New website planned launch in October 2014 • Fu
Slide 14: Business review - Mi Vet Club and Pet Medic Recruitment
CVS Group Plc Your pets, our priority Business review – Veterinary practices Mi Vet Club • Launched August 2013 – slow start • Two customers across six surgeries • Offering: - Buying power through NVS - Health and Safety - Crematoria - Laboratories www.mivetclub.co.uk - Pet Medic Recruitment Pet Med
Slide 15: Business review - Practice systems and people
CVS Group Plc Your pets, our priority Business review – Veterinary practices Practice management systems • 100% of surgeries are now using the Robovet system • Central database being developed to download data from all practices – Improved analysis – Improve processes and efficiency – Allow smoother
Slide 16: Business review - Laboratories
CVS Group Plc Your pets, our priority Business review - laboratories 15.0 5 year revenue £m 10.0 10.6 8.6 9.1 9.1 7.9 5.0 0.0 2010 2011 2012 2013 2014 Laboratory revenue split 2014 2013 £m £m Like-for-like revenue 10.0 9.1 1.5 5 year EBITDA £m Analyser business 0.6 - Total revenue 10.6 9.1 1.3 1.0 1
Slide 17: Business review - Laboratories
CVS Group Plc Your pets, our priority Business review – laboratories • Sales increased by 16.5% to £10.6m • Our in-practice analyser system was launched during the year, our focus to install analysers into our own practices first • External analyser sales to commence in 2015 Internal vs Externals sa
Slide 18: Business review - Animed Direct
CVS Group Plc Your pets, our priority Business review - Animed Direct 4 year Revenue £m 10 8 8.5 6 4 4.9 2 0.9 3.0 0 2011 2012 2013 2014 Revenue growth of 74.3% to £8.5m 0.4 4 year EBITDA £m Adjusted EBITDA increase of 80.2% to £0.3m 0.3 0.3 Low EBITDA for the first half of the year 1.5% mainly due
Slide 19: 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 2014 Number of product lines 2,700 3,900 4,200 4,200 Average order value £27.14 £27.78 £28.34 £29.91 Orders placed per day 120 410 650 777 No of customers 19,000 56
Slide 20: Business review - Crematoria
CVS Group Plc Your pets, our priority Business review - Crematoria 5 year revenue £m 1.8 5 year EBITDA £m 0.6 1.6 1.4 1.6 0.5 1.2 0.5 0.5 0.4 1.0 0.4 0.8 1.0 0.3 0.9 0.3 0.3 0.6 0.8 0.7 0.2 0.4 0.2 0.1 0.0 0 2010 2011 2012 2013 2014 2010 2011 2012 2013 2014 Crematoria revenue split 2014 2013 £m £m L
Slide 21: Business review - Crematoria
CVS Group Plc Your pets, our priority Business review – Crematoria Silvermere Haven Limited • Acquired in January 2014 • Improved geographical coverage • All local CVS practices now transferring to Silvermere – to be completed by June 2015 • High license capacity www.cvsgroupplc.com 21
Slide 22: 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 4.5% of sales to 5.0% in the year • Investment during the year in: – MiVetClub – Own Brand – Reorganisation of Finance – Increase in
Slide 23: Financial results - Profit & loss
CVS Group Plc Your pets, our priority Financial results -Profit & loss Year ended Year ended 30 June 2014 30 June 2013 £'m £'m Revenue 142.9 120.1 Cost of sales (96.3) (78.2) Gross profit 46.6 41.9 Administrative expenses (39.1) (35.2) Operating profit 7.5 6.7 Net finance expenses (1.2) (1.2) Profit
Slide 24: Financial results - Balance sheet
CVS Group Plc Your pets, our priority Financial results –Balance sheet 30 June 2014 30 June 2013 £'m £'m Non-current assets Intangible assets 58.8 53.5 Property, plant and equipment 14.5 11.4 Investments 0.1 0.1 Deferred income tax assets 1.1 0.6 74.5 65.6 Current assets Inventories 4.6 3.5 Trade an
Slide 25: Financial results - Cash flow
CVS Group Plc Your pets, our priority Financial results – Cash flow Year ended Year ended 30 June 2014 30 June 2013 £'m £'m Cash flows from operating activities Cash generated from operations 20.7 16.7 Taxation paid (2.5) (2.1) Net interest paid (1.2) (1.2) Net cash generated from operating activiti
Slide 26: Financial results - Capital expenditure
CVS Group Plc Your pets, our priority Financial results – Capital expenditure Total capital expenditure in the Capital expenditure year amounted to £5.3m £0.9 Refurbishments • Practice refurbishments at the £0.1 Springfield in Rotherham, Norton £1.7 Improving and Mills in Taunton, Carrick Vets in ma
Slide 27: Financial results - Net debt
CVS Group Plc Your pets, our priority Financial results – Net debt £2.3m of £36.0m loan repaid during the year £10.0m Revolving Credit Facility un-utilised at year end Net debt increased by £1.3m in the year after significant investment in acquisitions and capital expenditure Net debt Net debt: EBIT
Slide 28: Outlook
CVS Group Plc Your pets, our priority Outlook Existing Business • Development of referral services • Introduction of more own brand products • Growth and development of customer loyalty schemes • Expansion of E-Commerce in the UK and overseas Growth through selective acquisitions • Continue to acqui
Slide 29: Appendices
CVS Group Plc Your pets, our priority Appendices www.cvsgroupplc.com 29
Slide 30: Overview
CVS Group Plc Your pets, our priority Overview • UK’s largest National operator 2,786 employees and consolidator of veterinary practices 671 vets • Market leader, making CVS the acquirer of choice 268 Surgeries nationwide • Consistent growth in a more challenging environment 5 Diagnostics laboratori
Slide 31: EBITDA Margin analysis
CVS Group Plc Your pets, our priority EBITDA Margin analysis Year ended 30 June 2010 2011 2012 2013 2014 £m £m £m £m £m Revenue 85.5 101.5 108.7 120.1 142.9 EBITDA 13.1 14.5 15.7 16.5 19.7 % of sales % % % % % Gross margin - Group 37.2 36.1 36.0 34.9 32.6 -Practices 84.7 84.8 85.0 84.9 84.6 -Animed
Slide 32: 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 33: Cash generated from operations
CVS Group Plc Your pets, our priority Cash generated from operations Year ended Year ended 30 June 2014 30 June 2013 £'m £'m Profit for the year 4.8 4.0 Taxation 1.5 1.5 Total finance costs 1.2 1.2 Amortisation of intangible assets 7.3 6.2 Depreciation of property, plant and equipment 2.8 2.5 Contin
Slide 34: Bank covenants
CVS Group Plc Your pets, our priority Bank covenants • The key financial banking covenants are: Covenant Details Ratio required 30 June 2014 (unaudited) Cash flow cover Cash flow available At least 1.0:1 2.96 for debt service: total finance payments Senior debt/EBITDA Must not exceed 1.67 3.0:1 Seni
Slide 35: Our locations
CVS Group Plc Your pets, our priority 35 Our locations www.cvsgroupplc.com
Slide 36: 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, share option expense and exceptional items. • Adjusted profit before income tax is calculated as p