Continued strong growth in a resilient veterinary market
CVS, the AIM-quoted veterinary group and one of the UK’s leading providers of integrated veterinary services, is pleased to announce its final results for the year ended 30 June 2022 (“2022”).
|£m except where stated||2022||2021||Change %|
|Group like-for-like (“LFL”) sales growth (%)1||8.0%||17.4%||-9.4 ppts|
|Adjusted EBITDA2 margin (%)||19.4%||19.1%||+0.3 ppts|
|Adjusted profit before tax3||75.5||66.2||14.0%|
|Adjusted earnings per share4 (p)||85.8||75.1||14.2%|
|Profit before tax||36.0||33.1||8.8%|
|Basic earnings per share (p)||36.2||27.3||32.6%|
|Net bank borrowings5||36.0||51.3||-29.8%|
|Final dividend (p)||7.0||6.5||7.7%|
- Like-for-like sales shows revenue generated from like-for-like operations compared to the prior year, adjusted for the number of working days. For example, for a practice acquired in September 2020, revenue is included from September 2021 in the like-for-like calculations.
- Adjusted EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) is profit before tax adjusted for interest (net finance expense), depreciation, amortisation, costs relating to business combinations, and exceptional items. Adjusted EBITDA provides information on the Group’s underlying performance and this measure is aligned to our strategy and KPIs.
- Adjusted profit before tax is calculated as profit before amortisation, taxation, costs relating to business combinations, and exceptional items.
- Adjusted earnings per share is calculated as adjusted profit before tax less applicable taxation divided by the weighted average number of Ordinary shares in issue in the year.
- Net bank borrowings is drawn bank debt less cash and cash equivalents.
- Leverage on a bank test basis is net bank borrowings, divided by adjusted EBITDA annualised for the effect of acquisitions, including costs relating to business combinations and excluding share option costs, prior to the adoption of IFRS 16.
- Revenue increased by 8.6%, to £554.2m (2021: £510.1m), with strong Group like-for-like1 sales growth of 8.0% benefitting from favourable market dynamics and the continued focus on delivering against our strategy
- Adjusted EBITDA2 growth of 10.2%, to £107.4m (2021: £97.5m), through strong revenue performance and operational efficiencies
- Profit before tax increased by 8.8%, to £36.0m (2021: £33.1m) benefitting from the increase in adjusted EBITDA, a reduction in costs relating to business combinations partially offset by an impairment of investment relating to the acquisition of the Quality Pet Care Ltd
- Leverage6 fell to 0.40x (2021: 0.68x) as a result of strong EBITDA growth, continued good operating cash generation and reduction in net debt
- Cash generated from operations increased by 15.9% to £93.1m (2021: £80.3m), primarily as a result of the increase in adjusted EBITDA
- Increasing demand for our services as the pet population continues to grow, with our colleagues showing commitment and dedication to providing exceptional care to animals
- 0% increase in the average number of vets employed in the year
- Introduction of industry-first CVS Clinical Research Awards, providing grants for research projects
- Increased investment in capital projects by £7.9m to £24.5m in 2022 vs 2021, to improve quality of facilities and equipment, including 23 refurbishments and relocations during the financial year (2021: 13)
- Published our first standalone Sustainability Report, describing the goals and activities of our ESG working groups and reporting sustainability data under the Sustainability Accounting Standards Board (SASB) metrics
- Three acquisitions of four practice sites made during the second half of the financial year
Current trading & Outlook
- Strong sales and like-for-like1 growth in the first ten weeks versus the same period in the previous financial year
- We are pleased with the momentum in the business and trade in line with market expectations
- Continued growth in our Healthy Pet Club to 475,000 members (+4.4% compared to 31 August 2021)
- Record number of new graduate vets recruited
- Two new acquisitions made since the year end for consideration of £7.8m, with a healthy pipeline of potential deals
- Further growth opportunity with our strategic partner, Dobbies, to co-locate our practices in their garden centres, with a successful first site opened in August 2022, and more to follow
- Plans to open three further greenfield sites during FY23 in addition to a new state-of-the-art veterinary hospital in Bristol
- Whilst we are mindful of the wider macroeconomic backdrop and inflationary pressures, the Group remains well positioned to continue delivering attractive growth and shareholder value
- We look forward to sharing further insight into these growth opportunities and our capital allocation priorities at our forthcoming Capital Markets Day on 8 November 2022
Richard Fairman, Chief Executive Officer, commented:
“I’m pleased that we have delivered a strong set of results, with good growth against all of our key financial metrics despite a challenging macro-economic backdrop. Our continued focus on providing the best possible clinical standards, led by our fantastic colleagues who are committed to high quality veterinary care, has contributed to the strength of our performance.
“The veterinary market remains resilient, with an increasing pet population providing favourable dynamics and a strong platform for sustainable growth across our integrated services. Continued investment in our facilities, clinical equipment and our people support this growth; significant enhancements to our pay and benefits ensure we remain an attractive employer, and we are recruiting more graduates than ever before. We now employ c.5,000 vets and nurses across the Group.
“Our pipeline for acquisitions also continues to build, supplementing the organic growth opportunities in the business. With a positive start to the new financial year, we remain confident in our ability to deliver value for all our stakeholders.”
The Annual Report is available here.