CVS Group plc Annual results for the year ended 30 June Your pets, our priority

Transcription

1 CVS Group plc Annual results for the year ended 30 June 2014 Simon Innes Chief Executive Officer Nick Perrin Finance Director

2 Highlights Strategy Business review - Practices - Laboratories - Animed Direct - Crematoria - MiVetClub Financial review Appendices Agenda 2

3 Highlights Year ended 30 June 2014 Year ended 30 June 2013 Increase % Revenue ( m) Adjusted EBITDA ( m) Adjusted profit before income tax ( m) Adjusted earnings per share (pence) Operating profit ( m) Profit before income tax ( m) Basic earnings per share (pence) Proposed dividend (pence) See appendix for definition of adjusted items Percentage increases have been calculated throughout this document based on the underlying values. 3

4 Highlights Revenue Growth up 19.0% to 142.9m Like-for-like sales +6.9% EBITDA Adjusted EBITDA up 19.7% to 19.7m Acquired and integrated 18 surgeries Sales Adjusted EPS Adjusted earnings per share up 17.3% to 19.0p Acquired our third Pet Crematorium Silvermere Haven Limited

5 Highlights CVS CVS owns 268 surgeries and is the largest provider of Veterinary services to Pet owners in the UK Companion Care and Vets4pets Medivet Goddards 180, , , , ,000 80,000 60,000 40,000 20,000 0 HPC membership numbers 162, ,916 65,490 17,234 28, Independent Vetcare Healthy Pet Club members up over 45% to 162,000 Animed Direct Revenue m 6.0 Animed Direct revenue up 74.3% to 8.5m

6 Strategy Our vision Our strategy Outcome To continue to be the largest & best provider of veterinary services to pet owners in the UK whilst providing a growing return to our shareholders Meeting all our customers needs High quality clinical care and excellent customer service Providing services to other veterinary practices Expanding our business through acquisitions Growing the return to shareholders 6

7 Business review - Results by division Four main business areas Veterinary practices Diagnostic laboratories Pet Crematoria Online dispensary Turnover by business area m % of Turnover per Business Area Practices Laboratories Crematoria Animed Direct % 7.2% 1.1% 5.8% % 7.4% 0.8% 4.0% % 7.6% 0.8% 2.7% Practices Labs Crematoria Animed direct The above reflects sales prior to the inter-company elimination between the practice division and other divisions 7

8 Results by division Year ended 30 June 2014 Practices Laboratories Crematoria Animed Direct Head Office Group Revenue ( m) (4.2) EBITDA ( m) (7.1) 19.7 Gross Margin after materials % EBITDA % Year ended 30 June 2013 Practices Laboratories Crematoria Animed Direct Head Office Group Revenue ( m) (3.6) EBITDA ( m) (5.4) 16.5 Gross Margin after materials % EBITDA %

9 Business review - Veterinary practices Year revenue m Practice revenue split 2014 m 2013 m Like-for-like revenue acquisitions acquisitions Total revenue Like-for-like sales 4.1% year EBITDA m

10 Business review Veterinary practices 268 surgeries across the UK 18 acquired during the year 6 acquired since the year end Practices acquired During the year Location Business Crescent Veterinary Clinic Melton Mowbray Small animal, large animal and equine Miller & Swann Elgin Small animal Westmount Vets Limited Halifax Small animal Anchorage Acle Small animal, large animal and equine Coopers Vets Hastings Small animal Larwood & Kennedy Limited Dereham Small animal, large animal and equine Oaklands Yarm Small animal and equine 3 Mile Glasgow Small Animal Ashfield Halifax Small Animal Castle Barnard Castle Small animal, large animal and equine Since the year end: Riversbrook Ipswich Small Animal Coopers Vets West End Vets Edinburgh Small Animal Anrich Huddersfield Small Animal 10

11 Business review Veterinary practices Referrals Professor John Innes joined 1 st 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 aim to develop into a major multi-disciplinary referral centre starting Summer 2015 A further site has also been identified as a specialist referral site MRI and CT Scanner purchases planned 11

12 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 prices and better margins Out-of-hours During the year we established 4 dedicated emergency out-of-hours centres Sales of over 25k per week More planned to be established later in the year in areas of CVS practice consolidation 12

13 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 Future developments: Senior pet scheme and new Equine scheme 200, , ,000 HPC membership numbers 65, , ,000 50,000 17,234 28,

14 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 - Pet Medic Recruitment Pet Medic Recruitment Now providing 70% of locum requirements Saving costs & delivering better quality Some permanent hires and third party work 14

15 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 growth People Significant investment and continued focus on training and professional development for all staff 35 graduate vets recruited and trained in vets enrolled on our Advanced Practitioner Programme 15

16 Business review - laboratories year revenue m Laboratory revenue split 2014 m 2013 m year EBITDA m Like-for-like revenue Analyser business Total revenue Revenue growth of 16.5% to 10.6m Like-for-like sales 10.2% EBITDA improved to 1.3m Analyser revenue mostly internal 16

17 276, , , , ,860 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 sales Number of laboratory tests performed 73% 27% Internal sales External sales 400, , , , , , ,000 50,

18 Business review - Animed Direct year Revenue m year EBITDA m Revenue growth of 74.3% to 8.5m Adjusted EBITDA increase of 80.2% to 0.3m Low EBITDA for the first half of the year 1.5% mainly due to one off warehouse reorganisation costs. EBITDA for the second half of the year rose to 5.2% 18

19 Business review Animed Direct Good sales growth and positive cash contribution Number of product lines 2,700 3,900 4,200 4,200 Average order value Orders placed per day No of customers 19,000 56, , ,000 Conversion rate 15% First local language website to be launched in France in October 2014 German site to follow before the end of the financial year 19

20 Business review - Crematoria year revenue m year EBITDA m Crematoria revenue split 2014 m 2013 m Like-for-like revenue Silvermere Haven Total revenue Like-for-like sales 35.3% 20

21 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 21

22 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 HPC administration New IT manager 22

23 Financial results -Profit & loss Year ended 30 June 2014 Year ended 30 June 2013 'm 'm Revenue Cost of sales (96.3) (78.2) Gross profit Administrative expenses (39.1) (35.2) Operating profit Net finance expenses (1.2) (1.2) Profit before income tax Income tax expense (1.5) (1.5) Profit after income tax Earnings per ordinary share - Basic 8.3p 7.1p - Adjusted 19.0p 16.2p Dividend 2.5p 2.0p 23

24 Financial results Balance sheet 30 June 2014 'm 30 June 2013 'm Non-current assets Intangible assets Property, plant and equipment Investments Deferred income tax assets Current assets Inventories Trade and other receivables Cash and cash equivalents Total assets Current liabilities Trade and other payables (25.7) (21.6) Current income tax liabilities (1.0) (0.9) Borrowings (3.6) (2.2) (30.3) (24.7) Non-current liabilities Borrowings (29.9) (33.6) Deferred income tax liabilities (3.7) (4.1) Derivative financial instruments - (0.2) (33.6) (37.9) Total liabilities (63.9) (62.6) Net assets

25 Financial results Cash flow Cash flows from operating activities Year ended 30 June 2014 'm Year ended 30 June 2013 'm Cash generated from operations Taxation paid (2.5) (2.1) Net interest paid (1.2) (1.2) Net cash generated from operating activities Cash flows from investing activities Capital expenditure - acquisitions (12.4) (7.7) Capital expenditure - other (5.3) (4.1) Net cash used in investing activities (17.7) (11.8) Cash flows from financing activities Dividend paid (1.1) (0.8) Proceeds from issue of Ordinary shares Loan financing (2.3) - Net cash from financing activities (2.9) (0.7) Net increase in cash and cash equivalents (3.6) 0.9 Cash and cash equivalents at start of period Cash and cash equivalents at end of period

26 Financial results Capital expenditure Capital expenditure Refurbishments Improving and maintaining equipment IT systems development Motor vehicles Analysers Total capital expenditure in the year amounted to 5.3m Practice refurbishments at the Springfield in Rotherham, Norton Mills in Taunton, Carrick Vets in Chesterfield and the completion of The Grove at Fakenham In-house analysers installed for the practices Robovet rollout now 100% complete and corporate solutions being developed Significant capital expenditure items planned for 2015: Lumbry Park in Alton acquired in July 14 as a dedicated major multi-disciplinary referral centre, significant expenditure planned to refurbish the site A second dedicated referral site has been identified Significant expenditure planned on maintaining and improving existing practices 26

27 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: EBITDA m Ratio Jun-10 Jun-11 Jun-12 Jun-13 Jun

28 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 acquire practices, laboratories and crematoria to further strengthen geographical coverage Large opportunity with only 11% market share in small animal sector Further growth opportunities in large animal and equine sector Finance Continuing to maintain strong cash flow and healthy balance sheet Further investment in core business activities Significant development costs in referral business 28

29 Appendices 29

30 Overview UK s largest National operator and consolidator of veterinary practices Market leader, making CVS the acquirer of choice Consistent growth in a more challenging environment Complementary businesses to build on internalise margins and maximising revenues 2,786 employees 671 vets 268 Surgeries nationwide 5 Diagnostics laboratories 3 crematoria 1 On-line dispensary 30

31 EBITDA Margin analysis Year ended 30 June m m m m m Revenue EBITDA % of sales % % % % % Gross margin - Group Practices Animed Direct Laboratories Crematorium Central administration EBITDA margin (%)

32 Debt repayment profile Period End Repayment Balance m m 31 December December March June (2.25) 30 June September December March June (3.75) 30 June September December March June (4.00) 30 June September December (26.00) 6 December

33 Cash generated from operations Year ended 30 June 2014 'm Year ended 30 June 2013 'm Profit for the year Taxation Total finance costs Amortisation of intangible assets Depreciation of property, plant and equipment Contingent deferred consideration expensed in the year (Increase) in inventories (0.9) (0.1) (Increase) in trade and other receivables (0.5) (3.2) Increase in trade and other payables Share option expense Total cash flows from operating activities

34 Bank covenants The key financial banking covenants are: Covenant Details Ratio required 30 June 2014 (unaudited) Cash flow cover Senior debt/ebitda Senior interest cover Cash flow available for debt service: total finance payments EBITDA / Senior interest paid At least 1.0: Must not exceed 3.0:1 Banking covenants are tested on a 12 month rolling basis 1.67 At least 4.5:

35 Our locations 35

36 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 profit on ordinary activities before amortisation, taxation, costs relating to business combinations and exceptional items. Adjusted earnings per share is calculated as adjusted profit before income taxation divided by the weighted average number of Ordinary shares in issue in the year. 36