CVS Group plc · LSE:CVSG
CVS — FY2012 Earnings Presentation
28 slides from CVS's earnings presentation, September 2012
Slide 1: CVS Group plc Full Year Results
CVS Group plc Full Year Results 30 June 2012 September 2012
Slide 2: Highlights
Highlights Revenue growth + 7.1% to £108.7m Like-for-Like Sales + 2.9% EBITDA (adjusted) + 7.9% to £15.7m Operating profit + 6.7% to £6.8m EPS (adjusted) + 12.9% to 15.8p Proposed dividend* + 50.0% to 1.5p * Subject to approval at AGM Increase in loyalty scheme members from 28,000 to 65,000 during
Slide 3: Key Performance Trends
Key Performance Trends Continued delivery of significant revenue and profit growth, combined with material reduction in borrowings 3
Slide 4: Key Performance Trends
Key Performance Trends Significant reduction in net debt: • June 12 £30.9m • June 11 £33.5m • June 10 £41.9m Net debt:EBITDA • June 12 1.98 • June 11 2.31 • June 10 3.21 Significant reduction in borrowings 4
Slide 5: Initiatives
Initiatives New initiatives delivered: Locum agency Practice on-line shops Loyalty scheme expansion Leadership programme Planned new initiatives Buying group/ vet club Own brand product range 5
Slide 6: Practices – Overview
Practices – Overview 231 veterinary practices across the UK with 8 added in the year Revenue of £101.8m (93.6% of Group total) and £18.7m of EBITDA Property redevelopments: The Grove (£1m project) Regans (£200k project) Hartlepool (£100k project) Emmview (early stages; £25k to date)
Slide 7: Practice Division – Customer loyalty schemes
Practice Division – Customer loyalty schemes Healthy Pet Club revenue – 5.1% of divisional revenue in the year Pet membership growing strongly Adult Puppy/ Horse Rabbit Total Kitten 30 June 2011 24,568 3,631 191 - 28,390 30 June 2012 36,062 28,934 303 191 65,490 31 August 2012 38,578 34,087 325
Slide 8: Practice Division – Customer loyalty schemes
Practice Division – Customer loyalty schemes Average pet spend per year: – HPC client 80% higher than non-HPC client Developments: – Enhanced scheme offering – Wellness element – Standardised pricing – Loyalty scheme manager appointed – Link to on-line shops HPC website - link to and from Kenn
Slide 9: Practice Division – E-Commerce
Practice Division – E-Commerce On-line Dispensary Strong performance and significant growth opportunities Generated sales of £3.0m for the year (2011: £0.9m); current annual run-rate in excess of £4m Key data 2,997 product lines Average order value of £31.28 464 orders placed per day 7
Slide 10: Practice Division – E-Commerce
Practice Division – E-Commerce Online shops 7 on-line shops now operational (representing 32% of surgeries): Pet Doctors Nine Mile Regans Firstvets Bridge Springfield Active Vetcare Continued roll-out of on-line shops, alongside web development Linked to HPC Free home delivery
Slide 11: Laboratories
Laboratories Strong divisional performance during the year, like for like sales +5.9% to £9.1m of revenue despite loss of rabies work Growth due to new sales initiatives and enhanced sales team EBITDA £1.1m, up 15% on prior year Laboratories offer wide range of diagnostic services including
Slide 12: Crematorium (Rossendale)
Crematorium (Rossendale) Delivered £0.9m of revenue (2011: £0.8m) and £0.4m of EBITDA (2011: £0.3m) Intra-group sales 36%; external 64% High ROIC and substantial group synergies 12
Slide 13: Systems Development
Systems Development Practices Single Practice Management System – phased upgrades (financed within normal capex budget) 45% of sites at 30 June 2012 73% expected by 30 June 2013 Capex of circa £0.4m per annum Laboratories and Crematoria Laboratory system to be upgraded by October 2012 New
Slide 14: Results - Profit & Loss
Results - Profit & Loss Year ended Year ended 30 June 30 June 2012 2011 £'000 £'000 • Revenue growth +7.1% Revenue 108,745 101,491 • 2.9% like-for-like increase (On-line pharmacy, Cost of sales (69,584) (64,817) loyalty schemes) Gross profit 39,161 36,674 • Gross margin and operating margin (after A
Slide 15: Results - Cashflow
Results - Cashflow Year Year ended ended 30 June 30 June 2012 2011 £'000 £'000 Cash flows from operating activities • Increase in cash position since June 2011 of £1.7m after paying the following amounts; Cash generated from operations 15,546 17,639* Taxation paid (2,025) (1,267) - Capex, interest a
Slide 16: Results - Balance Sheet
Results - Balance Sheet 30 June 30 June 2012 2011 £'000 £'000 • Continued reduction in net debt Non-current assets - Jun 12 £30.9m Intangible assets 52,538 54,486 - Jun 11 £33.5m Property, plant and equipment 9,570 8,465 - Jun 10 £41.9m Investments 53 77 Deferred income tax assets 459 697 62,620 63,
Slide 17: 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 18: Appendices
Appendices 18
Slide 19: Overview of CVS
Overview of CVS UK’s largest National operator and consolidator of veterinary practices 2,317 employees Market leading position and reputation making CVS the acquirer of choice 545 vets Consistent delivery of growth year on year, however we continue to experience a more challenging 231 surgeri
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: 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 22: 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 23: 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
Slide 24: 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 25: EBITDA Margin Analysis
EBITDA Margin Analysis 2007 2008 2009 2010 2011 2012 £m £m £m £m £m £m Revenue 39.0 62.2 76.6 85.5 101.5 108.7 EBITDA 5.1 9.6 12.5 13.1 14.5 15.7 % of sales % % % % % % Gross margin -Practices 80.4 82.2 83.7 84.7 84.2 * 83.0 * -Laboratories 87.2 74.0 68.6 70.5 79.6 80.5 -Crematorium 0.0 0.0 90.2 86.
Slide 26: Cash generated from operations
Cash generated from operations Year Year ended ended 30 June 30 June 2012 2011 £'000 £'000 Profit for the year 2,888 3,487 Taxation 886 767 Total finance costs 3,058 2,128 Investment income (47) (24) Amortisation of intangible assets 5,655 5,348 Depreciation of property, plant and equipment 2,305 2,
Slide 27: Bank Covenants
Bank Covenants The key financial banking covenants are: Covenant Details Ratio Actual – 30 June 2012 requirement (unaudited) Cashflow Cashflow available At least 1.0:1 3.75 cover for debt service: total finance payments Senior debt / Must not exceed 2.04 EBITDA 3.0:1 Senior EBITDA / Senior At leas
Slide 28: Corporate Owned Surgeries
Corporate Owned Surgeries Corporate ownership currently represents circa 25% of small animal surgeries CVS is the only corporate with a strong nationwide presence Source: Individual business websites (September 2012) CVS is the recognised national consolidator in the market 28