CVS Group plc · LSE:CVSG

CVS — FY2010 Earnings Presentation

24 slides from CVS's earnings presentation, October 2010

  1. Slide 1: CVS Group plc Final Results Year to 30 June 2010

    CVS Group plc Final Results Year to 30 June 2010 October 2010

  2. Slide 2: Index

    Index  Highlights 3 Appendices  Overview of CVS 4  Financial Highlights 5 Margin Analysis 22  Profit & Loss 6 Debt Repayment 23  Cashflow 7 Bank Covenants 24  Balance Sheet Extracts 8  Financing 9  Acquisition Activity 2009/2010 10  Vet Surgeries 11  Practices 12  Practice Operations Stru

  3. Slide 3: Highlights

    Highlights  Revenue growth + 12%  Like for Like Sales  1st Quarter 2010/2011 (1.4)%  4th Quarter 2009/2010 (2.8)%  EBITDA (adjusted) growth + 5%  PBT (adjusted) growth + 11%  EPS (adjusted) growth + 4%  £12.6m of cash generated from operations + 2%  Acquisition growth, 41 surgeries and 1 la

  4. Slide 4: Overview of CVS

    Overview of CVS  UK’s largest National operator and consolidator of veterinary practices 2,200 employees  Market leading position and reputation making CVS the acquirer of choice 500 vets  Consistent delivery of growth year on year, however in 2009/2010 we have experienced a more challenging 211

  5. Slide 5: Financial Highlights

    Financial Highlights Year Ended 30 June 2010 30 June 2009 % change Revenue £85.5m £76.6m +12% EBITDA (adjusted) £13.1m £12.5m + 5% PBT £3.8m £ 4.4m - 14% PBT (adjusted) £9.3m £ 8.4m +11% Cashflow from operations £12.6m £12.4m + 2% EPS (adjusted) 11.9p 11.5p + 4% EPS (Basic) 5.7p 5.9p - 2% 5

  6. Slide 6: Profit & Loss

    Profit & Loss £000s Year Ended % change 30 June 2010 30 June 2009 Revenue +11.6% 85,527 76,605 Cost of Sales (51,176) (45,657) Administrative Expenses (21,286) (18,452) EBITDA (adjusted) +4.5% 13,065 12,496 EBITDA margin 15.3% 16.3% Depreciation & Amortisation (6,290) (5,368) Share option expense/tr

  7. Slide 7: Cashflow

    Cashflow £000s Year Ended % change 30 June 2010 30 June 2009 EBITDA (adjusted) +0.3% 13,065 12,496 Transaction costs (530) - Net working capital movement 89 (116) Cash generated from operations +2.0% 12,624 12,380 Interest (1,921) (2,597) Taxation (1,907) (828) Capex (2,042) (1,581) Repayment of ban

  8. Slide 8: Balance Sheet Extracts

    Balance Sheet Extracts £000s 30 June 2010 30 June 2009 30 June 2008 Intangible assets 56,695 41,886 37,272 Property, plant and equipment 8,835 7,467 6,757 Financial instruments/Investments 74 67 1,012 Current assets (excl. cash) 9,055 7,403 6,937 Cash 109 2,792 392 Total assets 74,768 59,615 52,370

  9. Slide 9: Financing

    Financing  £44m bank facilities now fully drawn down. Net debt of £42m at year end  Debt repayment of £1.9m in the year (see appendices for schedule of repayment profile)  Interest charge £2.0m (2009: £2.6m)  All acquisitions since December 2008 have been funded by cash generated from existing o

  10. Slide 10: Acquisition Activity 2009/2010

    Acquisition Activity 2009/2010  Acquired and successfully integrated 41 surgeries and a laboratory during the year. Of these acquired sites, 40 were completed in the last four months of the year  Historic annualised turnover acquired c £21m, of which £6m in 2009/2010 year (Historic annualised EBIT

  11. Slide 11: Vet Surgeries

    Vet Surgeries Surgery locations  Wide geographical spread across England  Initial presence in Scotland and Wales  Small animal practices – urban areas  Ripple effect  Share of UK market by surgeries: U.K. CVS % Small animals 2,103 210 9.9 Mixed* 1,635 - - Larger animals 60 - - Equine 134 1 0.7

  12. Slide 12: Practices

    Practices  Practices contributed £79.1m of revenue and £15.9m of EBITDA (increase of £1.5m) in FY to 30 June 10  The 210 small animal and 1 equine surgery offer a full range of veterinary services including referral expertise from a number of sites  Enhanced margin rates of return driven by bette

  13. Slide 13: Practice Operations Structure

    Practice Operations Structure Director of Vet Practices Steve Scully Senior RDs Veterinary Director Barry Brackner/ Tim Davies Julia Moulton DOCS RDs Marketing Manager Nick Acworth (Pet Doctors Team of 10 Paul O‟Reilly Inc. 5 AMs) 13

  14. Slide 14: Laboratories

    Laboratories  Laboratories contributed £7.9m of revenue and £1.1m of EBITDA (decrease of £0.2m) in FY to 30 June 10  The laboratories offer a wide range of diagnostic services including histopathology, microbiology and clinical chemistry  25% of business done by labs is intra-group and 75% is for

  15. Slide 15: Crematorium

    Crematorium  Rossendale Pet Crematorium acquired in October 2008  Internalisation of margin and increased range of service offering  Contributed £0.7m of revenue (2009: £0.4m) and £0.3m of EBITDA in FY 10  26% of business done by crem is intra-group and 74% is for outside customers  High ROIC a

  16. Slide 16: On Line Dispensary

    On Line Dispensary  Selling prescription, non prescription drugs and pet products to the UK animal owning population  Secure market share in the ever increasing amount of veterinary products being sold on-line  Broadens the Group‟s offering and range of products  Superior buying power of CVS com

  17. Slide 17: Veterinary Market

    Veterinary Market  Highly fragmented UK market of approx 4,000 surgeries  Five largest corporates currently own just 22% of small animal surgeries  CVS is currently the largest operator with 211 surgeries  Over 50% households owning a pet  Pet population remaining stable  Advances in medical i

  18. Slide 18: Corporate Owned Surgeries

    Corporate Owned Surgeries  Corporate ownership currently represents just 22% of small animal surgeries  CVS is the only corporate with a strong nationwide presence Corporate owned surgeries 250 211 200 150 100 79 66 61 45 50 Care 0 Source: Individual business websites CVS Medivet Goddards Companio

  19. Slide 19: Growth Strategy

    Growth Strategy Existing Business  Ability to continue revenue and margin growth:  Operational initiatives  Enhanced buying power  Development of clinical services within each practice  Existing portfolio of support services has further growth potential both from group and external practice cli

  20. Slide 20: Summary

    Summary  Largest operator and consolidator, highly respected within profession  Consistent delivery of growth  Continue to show some resilience to the challenging operating environment  High historic ROIC, strong gross and net margins, resilient like for like sales performance  Cost efficiencie

  21. Slide 21: Appendices

    Appendices 21

  22. Slide 22: Margin Analysis

    Margin Analysis Years ended 30 June 2005 2006 2007 2008 2009 2010 £m £m £m £m £m £m Revenue 12.9 20.2 39.0 62.2 76.6 85.5 EBITDA 1.3 2.4 5.1 9.6 12.5 13.1 % of sales % % % % % % Practices Gross Margin 78.7 79.7 80.4 82.2 83.7 84.9 Laboratories Gross Margin 89.1 87.8 87.2 74.0 68.6 70.5 Head Office 6

  23. Slide 23: Debt Repayment Profile

    Debt Repayment Profile Year End Repayment Balance £m £m 30 June 2010 42.1 September 2010 2.1 December 2010 1.0 March 2011 1.0 June 2011 1.0 (5.2) 30 June 2011 36.9 September 2011 1.0 December 2011 1.0 March 2012 1.0 June 2012 1.0 (4.0) 30 June 2012 32.9 September 2012 1.0 December 2012 0.7 March 201

  24. Slide 24: 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 2010 our covenant ratios

CVS Group — FY2010 Earnings Presentation on 6ix