CVS Group plc Interim results for the 6 months ended 31 December 2015 Simon Innes – Chief Executive Officer Nick Perrin – Finance Director
Agenda • Highlights • Industry update • Business review - Practices - Laboratories - Animed Direct - Crematoria • Outlook • Financial review • Appendices www.cvsgroupplc.com 2
Highlights 31 December 31 December Increase Year ended 2015 2014 % 30 June 2015 Revenue (£m) 100.7 81.9 23.0 167.3 Adjusted EBITDA (£m) 14.6 11.8 23.7 23.0 Adjusted profit before income tax (£m) 11.2 9.5 17.9 18.2 Adjusted earnings per share (pence) 14.7 12.9 14.0 24.7 Operating profit (£m) 5.4 5.8 (6.9) 9.8 Profit before income tax (£m) 4.3 5.2 (17.3) 8.5 Basic earnings per share (pence) 5.6 7.0 (20.0) 11.6 See appendix for definition of ‘adjusted’ items Percentage increases have been calculated throughout this document based on the underlying values www.cvsgroupplc.com 3
Highlights Adjusted EPS Sales H2 Adjusted EBITDA up 23.7% to 200 H1 30 £14.6m Pence per share 150 85.4 20 EBITDA 74.1 11.8 100 H2 £m 9.4 H1 50 100.7 25 81.9 10 68.8 14.7 12.9 0 20 9.6 11.2 2014 2015 2016 0 15 9.3 £m 2014 2015 2016 10 Revenue Growth up 23.0% to £100.7m 14.6 Adjusted earnings per share up 11.8 5 9.0 Like ke-for for-like ke sales es +3.0 .0% 14.0% to 14.7p 0 2014 2015 2016 Referrals Acquisitions Significant development of Record number of acquisitions in six referrals business: months: - Lumbry Park - 42 surgeries - Highcroft - 2 Crematoria - Dovecote - Vetshare buying group - VETisco instrumentation business www.cvsgroupplc.com 4
Industry update CVS owns 342 surgeries and is the largest provider of veterinary services to pet owners in the UK CVS Vets4 IVC Medivet Goddards Vets August Sovereign Pets Now Surgeries 342 390 222 123 49 2 53 2 Referral sites 6 2 2 2 2 Laboratories 5 1 1 1 Crematoria 6 1 Dedicated 7 54 out-of-hours Buying group 2 Instruments 1 business On-line 1 1 Most surgeries are small animal except for CVS and August www.cvsgroupplc.com 5
Industry update Referral centres: Wholesalers & buying • groups: Vets4Pets – North West Surgeons • CVS owns 2 buying – Anderson Moores groups: • IVC – MiVetClub – Croft – Vetshare – Southern Counties • Centaur owns 2 • Sovereign buying groups: – Willows – VetsWest – North Downs – St Francis • VetsNow – Swindon – Glasgow www.cvsgroupplc.com 6
Resul sults ts by by d div ivis ision ion Turnover by business area £m Four mai ain bu busi siness ss ar areas as 2.0 • Veterinary practices 4.8 7.2 • Diagnostic laboratories Practices Laboratories • Pet Crematoria Crematoria Online dispensary • Online dispensary 90.4 % o of Turnov over er per Business ess Area Practices Laboratories Crematoria Animed Direct 2016 - H1 86.6% 6.9% 1.9% 4.6% 2015 - H1 84.9% 7.4% 1.4% 6.3% 2014 - H1 86.8% 7.0% 0.9% 5.3% The above reflects sales prior to the inter-company elimination between the practice division and other divisions www.cvsgroupplc.com 7
Resul sults ts by by di divis ision ion Period ended 31 Practices Laboratories Crematoria Animed Head Group December 2015 Direct Office Revenue (£m) 90.4 7.2 2.0 4.8 (3.7) 100.7 EBITDA (£m) 16.0 1.6 0.6 0.2 (3.8) 14.6 Gross Margin after 84.0 80.7 80.3 21.0 - 83.8 materials % EBITDA % 17.7 21.6 32.4 5.0 - 14.5 Period ended 31 Practices Laboratories Crematoria Animed Head Group December 2014 Direct Office Revenue (£m) 72.0 6.3 1.2 5.3 (2.9) 81.9 EBITDA (£m) 13.2 1.0 0.3 0.2 (2.9) 11.8 Gross Margin after 83.6 74.3 78.1 15.3 - 81.4 materials % EBITDA % 18.3 15.8 26.5 2.8 - 14.3 www.cvsgroupplc.com 8
V ete terin inar ary p y pract ractices ices - results ults Revenue £m 160 140 120 75.5 100 80 60 90.4 40 72.0 20 0 2015 2016 EBITDA £m 30 Prac actic ice revenue ue up 25.5% .5% to to £90 90.4m .4m 25 20 12.1 EBIT ITDA DA growth owth of 21.2% .2% to to £16.0m .0m 15 10 16.0 Li Like-for or-like like sales es growth owth of 3.0 .0% 13.2 5 0 2015 2016 www.cvsgroupplc.com 9
V ete terina inary p y prac ractice tices s - acquisitio uisitions ns During the year Location No of Business surgeries Dovecote Veterinary Castle Donington 1 Small animal Hospital referral 342 su surgeries ies ac across ss Rosemullion Falmouth 3 Small & large animal the UK Torbridge Veterinary Bideford 3 Small animal Hospital Small & large Alnorthumbria Northumberland 9 animal & equine 42 Surger geries ies acqu quir ired ed in the Okeford Veterinary Centre Okehampton 2 Small animal first st half lf of the year ar Small animal & Highcroft Pet Care Bristol & Bath 13 referral Fife, Glasgow, Stoke, Albavet - surgeries 11 Small animal Nottingham, Wallington 8 Surge geries ries acqu quire ired after er the Buying group & Albavet – Vetshare and half lf year ar instrumentation VETisco sales After the year end Location No of Business surgeries Dart Vale Veterinary Group Dartmouth 6 Small & large animal Burghfield Reading 2 Small animal www.cvsgroupplc.com 10
V ete terin inar ary p y prac ractice tices s - refe ferrals als • Lumbry Park, our major multi-disciplinary referral centre in Alton, opened October 2015. • Referral centres acquired in Castle Donington (Dovecote) and Bristol (Highcroft). • Chestergates refit being planned. MRI & CT scanner in 2016/17. • 25 diploma holders now at CVS with a wide range of specialisms www.cvsgroupplc.com 11
Ve Veteri rina nary ry pra ract ctic ices es www.cvsgroupplc.com 12
V ete terina inary p y prac ractice tices s - Refe ferral ral • National coverage – ‘Hub and spoke’ – Blend of secondary and tertiary centres – Continuous evolution as the market develops • To be the employer of choice for veterinary specialists www.cvsgroupplc.com 13
Veter terina inary y practices tices Own Bran Ow and • High quality products • Distributed via Animed Direct • Now have 11 own brand medicines • Lower prices and better margins • Own brand pet food roll out to complete end of Q3 • Waiting room retail now in 133 practices with rollout to our other practices continuing – to complete end Q3 Ou Out-of of-ho hours urs • We now have 7 established dedicated emergency out-of-hours centres • Planning to open 2 more out-of-hours centres in the summer www.cvsgroupplc.com 14
V ete terin inar ary p y prac ractice tices Healt althy y Pe Pet Club • Over 11% increase in membership to 238,000 • HPC revenue – All practices - 12.6% of total revenue (2015: 12.5%) – Like-for-like practices - 15.2% (2015: 12.8%) • Direct mailing trial to be launched • 1 January 2016 price increased by £1 / month MiGroo roomers ers • 13 MiGroomer sites have now opened • Minimal capex • Incremental sales from Grooming and veterinary work • Training offered to staff who wish to train in this area www.cvsgroupplc.com 15
V ete terina inary p y prac ractice tices s – Buyi ying ng Grou oup www ww.m .mivetclub ivetclub.c .co.uk .uk www ww.vet .vetsha share.c e.co.uk .uk MiVetClub Vetshare Member sites 10 500+ Restricted to CVS dedicated & preferred goods Y N Wholesaler NVS Any CVS own brand products available Y Y Use of Labs offered CVS Idexx, NWL Use of Crems offered CVS PCS Other services from CVS Training, H&S, HPC Commitment to CVS dedicated and preferred list generates greater rebates from manufacturers www.cvsgroupplc.com 16
V ete terina inary p y prac ractice tices s - Tr Train ining ing • New Graduate Program 90 new graduates in 2015 • Advanced Practitioner Program 60-70 at any one time • MiNurse Academy > 150 nurses enrolled in 2015 – In house clinical training program – Modular courses, day courses, practical courses • Leadership program 8 day program for 12 candidates www.cvsgroupplc.com 17
V ete terina inary p y prac ractice tices s - careers ers • Larger group gives enhanced opportunities • Careers that are new to the whole veterinary industry • Careers suitable for part-time workers • Roles for small animal, large animal and equine www.cvsgroupplc.com 18
L abo borator tories ies - resul ults ts Revenue £m 15.0 10.0 6.8 £m H2 5.0 H1 7.2 6.3 0.0 2015 2016 EBITDA £m Reven enue ue growth h of 14.3% to £7.2m 2.5 Like-for-like e sales es +8.0% 2.0 1.2 1.5 EBITDA DA rose e to £1.6m £m H2 1.0 1.6 H1 0.5 1.0 0.0 2015 2016 www.cvsgroupplc.com 19
L abo borator tories ies • Sales increased by 14.3% to £7.2m • Increased focus on selling analysers to third parties. Developing well with increased numbers • Accreditations being sought to expand large animal testing • PCR testing has started but is still very much in the early stages – tests to be validated before becoming money generating Internal vs external sales Number of Laboratory tests performed 400,000 350,000 31% Internal sales 300,000 184,355 250,000 External sales H2 200,000 H1 150,000 69% 100,000 186,881 183,352 50,000 0 2015 2016 www.cvsgroupplc.com 20
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