REG - CVS Group plc - Interim Results
27/02/2025 07:15
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RNS Number : 6177Y CVS Group plc 27 February 2025
For Immediate Release
27 February 2025
CVS Group plc
("CVS", the "Company" or the "Group")
Interim results for the six-month period ended 31 December 2024
FY2025 Trading in line with market expectations; continued growth in Australia
CVS, the UK listed veterinary group and a leading provider of veterinary
services, issues its unaudited interim results for the six-month period ended
31 December 2024 ("H1 2025") and provides an update on year-to-date trading.
Comparative data is provided for the six months ended 31 December 2023 ("H1
2024"), unless otherwise stated.
Financial Highlights(1)
· Revenue from continuing operations increased by 6.6%, to £341.8m
(H1 2024: £320.5m)
· As reported in the 30 January trading update, overall Group
like-for-like sales(2) for the period compared to H1 2024 were -1.1% impacted
by a continuation of softer market conditions in the UK most notably in the
Group's online retail and laboratory businesses. Whilst performance across
CVS's core Veterinary Practice division was flat in the period, year on year
growth in this division and across the Group is expected in the second half of
the year
· Adjusted EBITDA(3) increased by 4.5%, to £67.4m (H1 2024: £64.5m)
underpinned by growth from acquisitions in Australia, marginally offset by
ongoing inflationary pressures
· Reported profit before tax on continuing operations decreased by
35.1%, to £17.4m (H1 2024: £26.8m) due to an increase in finance expense
(+£4.2m) from a combination of increased borrowing to fund acquisitions and
capital investment and higher interest rates; a non-cash increase in
depreciation and amortisation from investments made in recent years (+£6.6m);
and exceptional costs (+£1.4m) primarily in relation to the Competition and
Markets Authority ("CMA") process
· Leverage(7) increased to 1.66x (FY 2024: 1.54x) as a result of
the continued investment in acquisitions in Australia and capital investment,
but remains comfortably within our stated guidance of <2.0x leverage
· Operating cash conversion(8) increased 7.2ppts to 72.0% (H1 2024:
64.8%) (FY 2024: 70.5%) and is in line with the Group's 70%+ guidance
£m except where stated H1 2025 (unaudited) H1 2024(1) (unaudited) Change % FY 2024(1) (audited)
Revenue 341.8 320.5 6.6% 647.3
Group like-for-like ("LFL") sales growth (%)(2) -1.1% 6.5% -7.6ppts 2.9%
Adjusted EBITDA(3) 67.4 64.5 4.5% 127.3
Adjusted EBITDA(3) margin (%) 19.7% 20.1% -0.4ppts 19.7%
Adjusted profit before tax(4) 39.2 45.3 -13.5% 82.7
Adjusted earnings per share(5) (p) 40.0 48.3 -17.2% 86.6
Operating profit 26.4 31.6 -16.5% 50.8
Profit before tax 17.4 26.8 -35.1% 38.2
Basic earnings per share for continuing operations (p) 15.6 25.2 -38.1%
36.5
Net bank borrowings(6) 182.9 129.2 +41.6% 168.0
Notes
(1) Six months ended 31 December 2023 (H1 2024) has been re-presented
following the classification of the Netherlands and Republic of Ireland
operations as a discontinued operation in FY 2024.
(2) 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 2023, revenue is included from
September 2024 in the like-for-like calculations.
(3) 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.
(4) Adjusted profit before tax is calculated as profit before amortisation,
taxation, costs relating to business combinations, and exceptional items.
(5) 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.
(6) Net bank borrowings is drawn bank debt less cash and cash equivalents
(7) Leverage on a bank test basis is net bank borrowings divided by 'Adjusted
EBITDA', annualised for the effect of acquisitions, deducting cost in relation
to acquisition fees and adding back share option costs, on an accounting basis
prior to the adoption of IFRS 16.
(8) Operating cash conversion is defined as cash flows from operating
activities adjusted for discontinued operations, acquisition fees and
contingent consideration paid, less lease liability repayment and maintenance
capital expenditure; divided by adjusted EBITDA.
Operational Highlights
· Established a meaningful business and platform for growth in
Australia with confidence in the opportunity for further expansion. Completed
a further five practice acquisitions in H1 2025 for combined initial
consideration of £23.3m
· Invested over £100m (since July 2023) in Australia practice
acquisitions and now operate 27 practices, comprising 36 practice sites,
across six major states with annualised revenue of c.£55m
· Australian Practices are performing fully in line with management
expectations, with additional purchasing synergies identified and agreements
in place with preferred laboratory and crematoria suppliers
· Building on cloud-based system foundations, enhancing client
experience in practice and trialling systems that improve efficiencies with
practice teams
· Launched a new website for Animed Direct, improving speed and
usability
· Strong employee engagement resulting in a c.3% increase in the
average number of vets employed in the year (c.10% including acquisitions)
· Strengthened management team with senior appointments across
operations team
· Continued success of the Group's Healthy Pet Club preventative
healthcare scheme, with 507,000 members (+1.4%) (H1 2024: 500,000 members, FY
2024: 503,000 members).
Outlook
· Whilst the Board continues to be mindful of headwinds in the UK and
employment cost increases resulting from the UK Autumn Budget, the fundamental
need for high-quality veterinary care remains strong.
· The Group's expansion in Australia is progressing well and CVS
remains well positioned to deliver attractive growth in shareholder value over
the medium and long term. The Group has exchanged contracts on a further
Australian small animal practice acquisition comprising 6 sites, for initial
consideration of £5.7m (A$10.9m), with completion expected in the coming
weeks.
· In light of the uncertainty in the UK due to the ongoing CMA Market
Investigation, the Group has reprioritised investment activity into Australia,
where there is a more stable and supportive regulatory environment around the
sector. Until the conclusion of the CMA Market Investigation process in
November 2025, and pending the decisions to be reached in that process, the
Group has determined UK investment can only be undertaken on an exceptionally
disciplined basis, with respect to facilities, equipment and IT with no UK
acquisitions.
· The Group continues to support the CMA in its Market Investigation and
looks forward to the process reaching its statutory conclusion later in the
year.
· The Board reiterates its thanks to CVS colleagues and all the
Group's key stakeholders.
· The Board remains confident in the Group delivering full year
2025 results in line with market expectations.
Richard Fairman, Chief Executive Officer, commented:
"I am pleased to report that the Group has delivered further growth in both
revenue and adjusted EBITDA, notwithstanding the current weaker consumer
demand for veterinary care in the UK. CVS has increased its footprint and
delivered growth in Australia, achieving enhanced returns through synergies
and increasing scale benefits.
There is continued demand for high-quality veterinary care and with our focus
on clinical excellence and investment in practices and people, CVS is well
placed to deliver sustainable long-term growth.
I would like to take this opportunity to thank our colleagues, both in the UK
and Australia for their outstanding commitment and dedication and I look
forward to delivering further growth in 2025 and beyond."
Results webcast
An audio webcast and presentation of these results will be available on
https://stream.brrmedia.co.uk/broadcast/67a4930b836d608dd9c1c1be
(https://stream.brrmedia.co.uk/broadcast/67a4930b836d608dd9c1c1be) from
07.00am on 27 February 2025.
A Q&A for analysts and investors will be held today at 09.30am at
Berenberg, 60 Threadneedle St, London EC2R 8HP, attendance is by invitation
only. To access a live streaming of the event, please click on the following
link
https://brrmedia.news/CVSG_IR24 (https://brrmedia.news/CVSG_IR24)
Those wishing to participate in the Q&A session remotely should email
CVSG@camarco.co.uk for call details.
Retail investors' webcast
CVS Group is pleased to announce that Richard Fairman, Chief Executive
Officer, and Robin Alfonso, Chief Financial Officer will host a live
interactive presentation on the Engage Investor platform, on the 5th of March
at 4:30pm GMT.
CVS Group welcomes all current shareholders and interested investors to join
and encourages investors to pre-submit questions. Investors can also submit
questions at any time during the live presentation.
Investors can sign up to Engage Investor at no cost and follow CVS Group from
their personalised investor hub.
Register interest in this event here: https://engageinvestor.news/CVSG_IR24
(https://engageinvestor.news/CVSG_IR24)
Contacts
CVS Group
plc
via Camarco
Richard Fairman, Chief Executive Officer
Robin Alfonso, Chief Financial Officer
Paul Higgs, Chief Veterinary Officer
Peel Hunt LLP (Nominated Adviser & Joint Broker)
+44 (0)20 7418 8900
Christopher Golden / James Steel / Andrew Clark / Lalit Bose
Berenberg (Joint
Broker)
+44 (0)20 3207 7800
Toby Flaux / Michael Burke / James Thompson / Milo Bonser
Camarco (Financial PR)
Ginny Pulbrook
+44 (0)20
3757 4980
Tilly Butcher
Letaba Rimell
About CVS Group plc (www.cvsukltd (https://www.cvsukltd.co.uk/) .co.uk)
CVS Group is an AIM-listed provider of veterinary services with operations in
the UK and Australia. CVS is focused on providing high-quality clinical
services to its clients and their animals, with outstanding and dedicated
clinical teams and support for colleagues at the core of its strategy.
The Group now operates c.460 veterinary practices across its two territories,
including specialist referral hospitals and dedicated out-of-hours sites.
Alongside the core Veterinary Practices division, CVS operates Laboratories
(providing diagnostic services to CVS and third-parties), Crematoria
(providing pet cremation and clinical waste disposal for CVS and third-party
practices) and an online retail business ("Animed Direct").
The Group employs c.9,000 people, including c.2,400 veterinary surgeons and
c.3,300 nurses and patient care assistants.
Introduction
The Board is pleased to report that the Group has delivered further growth in
both revenue and adjusted EBITDA through its continued focus on providing
high-quality care to its clients and their animals. In the six-month period to
31 December 2024, Group sales increased 6.6% to £341.8m (H1 2024:
£320.5m). Overall Group like-for-like sales(2) for the period compared to
H1 2024 were -1.1%, impacted by a continuation of softer market conditions in
the UK, most notably in the Group's online retail and laboratory businesses.
Whilst revenue from CVS' core Veterinary Practice division was flat, the Group
expects to deliver year on year revenue growth in this division and across the
Group in the second half of the year.
Adjusted EBITDA(3) increased by 4.5% to £67.4m (H1 2024: £64.5m) with an
adjusted EBITDA(3) margin of 19.7%, in line with target EBITDA margins.
Whilst trading continues to be impacted by a softer market in the UK, the
Group is confident in delivering like-for-like revenue growth in H2 2025 and
progressing towards CVS' five-year plan to double adjusted EBITDA underpinned
by:
• Organic revenue growth of 4% - 8% per annum;
• Adjusted EBITDA margin between 19% to 23%;
• Investment in practice facilities and technology to deliver
additional organic growth;
• Investment in selective acquisitions subject to disciplined
criteria for returns and earnings accretion;
• Operating cash conversion greater than 70%; and
• Maintaining leverage (net debt to EBITDA ratio) below 2.0x.
Competition and Markets Authority (CMA)
The Group will continue to support the CMA with its investigation and looks
forward to the CMA's publication of three further working papers in the next
two months. The statutory deadline for the CMA to conclude the Market
Investigation is 22 November 2025.
M&A: CVS has established a meaningful business in Australia and is
confident in the opportunity for further growth.
Attractive market with relatively low levels of corporate consolidation,
favourable market dynamics and strong similarities with the UK
In July 2023 CVS entered the Australian veterinary services market in
accordance with its growth objectives, as outlined in the five-year plan, to
execute on scalable international consolidation opportunities subject to
maintaining its disciplined acquisition criteria. To date CVS has completed 27
practice acquisitions, comprising 36 practice sites, for combined
consideration in excess of £100m including five acquisitions in H1 2025 for
initial consideration £23.2m.
CVS has built its presence across Australia in and around the major cities of
Sydney, Melbourne, Brisbane, Adelaide, Newcastle and Perth. The combined
historical multiples paid are lower than those in the UK and the internal rate
of return within the relevant acquisition business cases is comfortably above
the Group's hurdle rate of 10%. The acquisitions made to date are performing
well and in line with expectations. These acquisitions, together with a strong
pipeline, provide a meaningful platform for CVS's operations in Australia. The
Group is focused on acquiring high-quality small animal practices with good
facilities and strong practice management teams. CVS's local senior
management team work closely with the practice management teams in supporting
the growth of their practices and in generating value from the Group's
expanding presence in Australia. Appropriate governance is maintained through
support functions in the UK and Australia-based resource in the key functions
of finance, legal and HR.
The Group expects to benefit increasingly over time from additional advantages
of scale as it further expands in Australia, including improved drug
purchasing terms, laboratory and crematoria synergies from preferred supplier
networks, revenue growth and margin enhancement with a focus on high-quality
clinical care and developing a market leading employee and client experience.
The Group's people-focused approach with a clinical-led culture is attracting
talent and also further practice acquisition leads. The Group has over 600
colleagues, in Australia, including over 200 vets and over 300 nurses, and
supports them in delivering the best care to our patients with oversight from
the CVS Australia Clinical Advisory Committee. A supportive working
environment has been created for the Group's Australian teams through a
package of relevant colleague rewards and benefits. CVS has recently
launched 'Knowledge Hub' with over 450 veterinary and management courses,
programmes and webinars. Utilising the experience and success of the Group's
UK learning and education platform alongside launching a new graduate
programme in 2025 and providing dedicated Wellbeing Champions in each
practice, CVS has a differentiated and highly attractive employee proposition
in Australia.
Building on the Group's cloud-based system foundations to improve client
experience and ultimately clinical care
Following the roll out of the Group's cloud-based practice management system
in Q4 FY2024, CVS is focused on further improving the client experience. With
enhancements to local practice websites, a pilot of online booking for
appointments will be conducted in H2 2025 alongside the provision of more
convenient ways for clients to pay and digital product and prescription
reminders with home delivery available to enhance client convenience.
This enhanced technology should also benefit practice teams, with improved
usability and flexibility of the practice management system, and an Artificial
Intelligence (AI) tool being trialled to convert veterinary consultation
recordings into clinical notes, thereby improving efficiency in the consulting
room.
A new Animed Direct website was launched in February 2025. This improves the
shopping experience, provides enhanced product ranges and comes with a
complete brand refresh to bring the consumer proposition up to date with
client expectations.
Continuing to promote great clinical care in a contextualised way
The Group recognises that aligning culture, accountability, ownership,
leadership support and visibility promotes clinical care. The Group encourages
this within its operations in order to ensure clinicians are empowered to
understand client requirements and to provide appropriate clinical care. CVS
recently launched a campaign 'Let's Learn from Mistakes' where colleagues are
encouraged to complete a learning review after an adverse event and to record
these on VetSafe, the Veterinary Defence Society's confidential adverse event
recording platform. Led by over 500 Clinical Improvement Advocates, this not
only improves psychological safety amongst the Group's clinical teams, but
allows for dissemination of learnings in order to drive continuous improvement
in care.
The Group's focus on antimicrobial stewardship has delivered a further
reduction in the prescribing of the Highest Priority Critically Important
Antibiotics (HPCIA), with an average reduction of 1.1% in 2024 compared to the
benchmark, which equates to about 35,000 fewer prescriptions of these types of
antibiotics.
CVS voluntarily adopts the Royal College of Veterinary Surgeons ("RCVS")
Practice Standards Scheme (PSS) across its UK operations, adhering to the
highest standards expected of our profession. This voluntary scheme gives the
RCVS the ability to inspect CVS practices and to provide recommendations where
appropriate. The Group currently has 103 PSS awards in recognition for going
above and beyond the standard expected across the categories, primarily in
client service.
Investing in great facilities and equipment to ensure appropriate and
effective working environments
In H1 2025, CVS invested £16.8m (H1 2024: £17.2m) in capex. Of this £5.0m
was on practice relocations, refurbishments and clinical equipment, including
the expansion into a further site and training facility for Harrogate Vets, a
thriving practice in the north of England.
In light of the uncertainty discount created by the ongoing CMA Market
Investigation, the Group continues to be highly selective about UK investment,
with very disciplined capital investment in facilities, equipment and IT and
no UK acquisitions.
People: CVS's vision is to be the veterinary company people most want to work
for
CVS remains a people focused business and is pleased to report an improvement
in colleagues' satisfaction, as measured through the Group's employee net
promoter score, improving to +3.8 (FY 2024: -2.8). During the prior year, this
employee net promoter score was impacted due to the cyber incident,
accelerated roll out of cloud-based systems and the ongoing CMA review. The
Group is therefore pleased with the progress made in the past six months, and
is on track to achieve its target of +5.0 by June 2025.
Development and progression for CVS colleagues remains a key focus; a new
nurse career framework has been embedded and a dedicated framework has
recently been introduced for receptionists. Guidance has been introduced to
support personal development discussions with all colleagues, with continued
emphasis on regular check-ins (87% of CVS colleagues report that they have
these regularly with their line managers). CVS encourages interactive
meetings across all teams, with 88% of colleagues reporting that these take
place regularly. These regular team touch points contribute to colleague
satisfaction by creating an opportunity for feedback, development and improved
colleague wellbeing.
CVS continues to recruit clinicians, and now employs more vets and nurses than
ever before. The Group has seen an increase in the average number of vets
employed in calendar year 2024 vs calendar year 2023, excluding acquisitions
of c.3% and nurses remained flat. CVS's market leading New Graduate Programme
also saw over 180 New Graduates join the scheme in 2024. The Group's
well-understood, people focused strategy is delivering positive momentum in
CVS becoming the veterinary company people most want to work for.
CVS remains focused on controlling locum usage. Whilst locums provide
flexibility and cover which is particularly important in the provision of
out-of-hours care, the Group has launched a new locum booking system which
simplifies the booking process and should lead to lower costs.
Sustainability and ESG
CVS published its third Sustainability report in September 2024 showcasing the
progress made across six key Sustainability and ESG focus areas.
The Group has developed a pet bereavement support booklet, endorsed by the
Blue Cross Pet loss support. For many children, losing a pet is their first
experience of the passing of a loved one and this is why our Crematoria
business launched the 'Goodbye My Friend' booklet, to help process the loss of
a beloved companion animal.
CVS has collaborated on antimicrobial resistance collating evidence to support
responsible antibiotic prescribing and infection control processes, thereby
helping to balance the requirement of animal welfare with the environment and
public health.
CVS also takes the opportunity to celebrate its apprentices. The Group has a
minimum of 450 apprentices at any time, covering a variety of programmes. CVS
promotes opportunities to support the development of its colleagues and to
attract new talent to the profession. CVS also took a moment to recognise Time
to Talk Day, encouraging colleagues throughout the group to have a
conversation about mental health, to reduce stigma associated with this issue.
This aligns with being the company people most want to work for.
Financial and operational review:
Financial highlights1
H1 2025 marked further progress against the Group's plan to double adjusted
EBITDA over five years, as outlined at CVS's Capital Markets Day in November
2022. The Group delivered revenue growth of 6.6% to £341.8m (H1 2024:
£320.5m) and adjusted EBITDA growth of 4.5% to £67.4m (H1 2024: £64.5m).
During the prior year, CVS made the strategic decision to dispose of its
Netherlands and Republic of Ireland (ROI) operations due to specific
challenges in both these markets and the sub-scale nature of these operations.
In light of this, prior year numbers have been re-presented to reflect the
Netherlands and ROI as discontinued operations.
Overall Group like-for-like sales(2) for the period, compared to H1 2024, were
-1.1% impacted by softer market conditions in the UK, most notably in the
Group's online retail and laboratory businesses. Performance across the core
Veterinary Practice division was flat and the Group expects to deliver
year-on-year growth in this division and across the Group in the second half
of the year. (H1 2024: Group like-for-like 6.5%).
Year-on-year revenue growth was delivered through our expansion into the
Australian veterinary services market. The Group is delighted to welcome new
colleagues from 27 practice acquisitions in Australia, including from five
practices acquired since July 2024. The Group's short-term expansion focus
continues to be on the Australian market where there is a strong pipeline of
exciting opportunities and a more certain regulatory environment.
Leverage has increased to 1.66x from 1.54x at FY 2024 (H1 2024: 1.15x) and
remains well within the Group's stated guidance of <2.0x. The increase in
net bank borrowings by £14.9m since 30 June 2024 to £182.9m (H1 2024:
£129.2, FY 2024: £168.0m) comes from acquisition investment of £23.2m (H1
2024: £63.1m, FY 2024: £96.2m) and continued focus on investment in practice
facilities of £16.8m (H1 2024: £17.2m, FY 2024 £43.1m). Operating cash
conversion remains strong at 72.0%.
The Group financial highlights are as follows:
H1 2025 H1 2024 Change FY 2024
(unaudited) (unaudited) % (audited)
Revenue (£m) 341.8 320.5 6.6% 647.3
Gross profit (£m) 148.7 139.8 6.4% 277.9
Operating profit (£m) 26.4 31.6 -16.5% 50.8
Profit before tax (£m) 17.4 26.8 -35.1% 38.2
Profit from continuing operations (£m) 11.3 18.1 -37.6% 26.4
Basic earnings per share from continuing operations (p) 15.6 25.2 -38.1% 36.5
Adjusted1 financial highlights
H1 2025 H1 2024 Change FY 2024
(unaudited) (unaudited) % (audited)
Adjusted EBITDA (£m) 67.4 64.5 4.5% 127.3
Adjusted profit before tax (£m) 39.2 45.3 -13.5% 82.7
Adjusted earnings per share (p) 40.0 48.3 -17.2% 86.6
Revenue
Total revenue increased 6.6% to £341.8m from £320.5m benefitting from
acquisitions made during the current and prior year offsetting negative
life-for-like sales.
Overall Group like-for-like sales(2) for the period compared to H1 2024 were
-1.1% (H1 2024: Group like-for-like 6.5%) impacted by softer market
conditions in the UK most notably in the Group's online retail and laboratory
businesses. Performance across the core Veterinary Practice division was
flat.
The Group is pleased that, despite this backdrop, membership of its
preventative Healthy Pet Club scheme continued to grow in the period,
increasing by 1.4% to 507,000 at December 2024 compared to December 2023 (H1
2024: 500,000 members, FY 2024: 503,000 members).
Gross profit/gross profit margin
Gross profit of £148.7m increased by 6.4% from £139.8m benefitting from an
increase in revenue with gross profit margin broadly flat at 43.5% (H1 2024:
43.6%).
Whilst cost of sales excluding clinical staff costs as a percentage of revenue
decreased favourably to 21.3% from 21.8%, this was offset by an increase in
clinical staff as a percentage of revenue to 35.2% from 34.6% as a result of
wage inflation and investment in people.
Operating profit
Operating profit decreased 16.5% to £26.4m from £31.6m impacted by an
increase in depreciation following a step up in recent years in capex
investment, an increase in amortisation from increased acquisition investment
and one-off exceptional costs in the year relating mainly to the CMA market
investigation.
This was partially offset by an increase in net Research and Development
Expenditure Tax Credits (RDEC) to £7.0m (H1 2024: £6.0m).
Profit before tax and basic earnings per share
Profit before tax decreased by 35.1% to £17.4m from £26.8m. Finance expense
increased to £9.0m from £4.8m following an increase in the cost of borrowing
and increased bank borrowing to support the Group's strategy of investment in
its practices and acquisitions. Consequently, basic EPS for continuing
operations decreased by 38.1% to 15.6p from 25.2p.
Adjusted EBITDA and adjusted earnings per share
Adjusted EBITDA increased by 4.5% to £67.4m from £64.5m benefitting from an
increase in revenue from acquisitions. Adjusted EBITDA margin decreased to
19.7% from 20.1% impacted by continued inflationary pressures and increased
people costs from wage inflation as well as continued investment in people,
partially offset by an increase in net Research and Development Expenditure
Tax Credits to £7.0m (H1 2024: £6.0m).
Despite the increase in adjusted EBITDA, adjusted EPS (as defined in note 2)
decreased 17.2% to 40.0p from 48.3p impacted by an increase in depreciation
from increased capital investment in recent years, an increase in finance
expense from increases in both cost of borrowing and net debt and an increase
in the effective rate of tax.
Adjusted EBITDA and adjusted EPS excludes the impact of amortisation of
intangible assets, costs relating to business combinations and exceptional
items.
A reconciliation between adjusted EBITDA and Operating profit is shown below:
£m H1 2025 H1 2024 Change FY 2024
(unaudited) (unaudited) % (audited)
Adjusted EBITDA 67.4 64.5 4.5% 127.3
Adjustments for:
Amortisation, depreciation, impairment and profit on disposal (31.9) (25.3) -26.1% (55.6)
Costs relating to business combinations (7.6) (7.5) -1.3% (15.1)
Exceptional items* (1.5) (0.1) -1400% (5.8)
Operating profit 26.4 31.6 -16.5% 50.8
* Exceptional items relate to costs incurred in relation with the
Competition and Markets Authority market investigation of £1.1m and
restructuring costs of £0.4m.
Long-term prospects for the Group continue to be strong, supported by its
great people. Despite the softer consumer environment in the UK currently, the
fundamentals in the sector remain strong with an increasing pet population,
pet life expectancy increasing and continued advancements in the standards of
clinical care.
Taxation
The effective tax rate on profit before tax from continuing operations was
35.1% in the period (H1 2024: 32.5%), which reflects the mix of tax rates in
the jurisdictions where the Group operates, together with the impact of an
increase in non-deductible expenses predominantly in connection with
acquisitions. The Group's tax charge for the period was £6.1m (H1 2024:
£8.7m).
All of the Group's revenues and the majority of its expenses are subject to
corporation tax. The main expenses that are not deductible for tax purposes
are costs relating to acquisitions and depreciation on fixed assets that do
not qualify for tax relief.
Divisional highlights
£m H1 2025 H1 2024 Change FY 2024
(unaudited) (unaudited) % (audited)
Veterinary practices 308.4 285.4 8.1% 577.5
Laboratories 15.6 16.3 -4.3% 31.6
Crematoria 6.2 6.0 3.3% 12.0
Online retail business 23.5 25.0 -6.0% 50.0
Central administration (11.9) (12.2) 2.5% (23.8)
Total Group revenue 341.8 320.5 6.6% 647.3
£m H1 2025 H1 2024 Change FY 2024
(unaudited) (unaudited) % (audited)
Veterinary practices 65.0 61.0 6.6% 120.1
Laboratories 4.5 5.3 -15.1% 9.2
Crematoria 2.3 2.1 9.5% 4.3
Online retail business 1.1 1.7 -35.3% 3.3
Central administration (5.5) (5.6) 1.8% (9.6)
Total Group adjusted EBITDA 67.4 64.5 4.5% 127.3
Veterinary practices (87.2%*)
The Group's Companion Animal division forms the majority of its Veterinary
Practices division. The focus of the Companion Animal division is on
delivering care clients require and this market will grow over time as pets
age.
CVS continues to focus on the recruitment, retention and development of its
highly skilled and dedicated colleagues. The Group employed an average of
c3.0% more vets in calendar year 2024 vs 2023 (excluding the impact of
acquisitions), reflecting a further reduction in attrition, a record graduate
vet intake and the ongoing recruitment of some of the best talent in the
profession.
The division also includes Referrals, Equine, Farm, Vet Direct, MiPet Products
and the Group's Healthy Pet Programmes.
During the period CVS focused on embedding its new cloud-based practice
management system and reviewing opportunities to enhance the client
experience.
The Group is delighted with the performance of its Australian practices, with
a further five acquisitions in H1 2025, which are all performing in line with
expectations.
Laboratories (4.4%*)
CVS's Laboratories division provides diagnostic services and in-practice
desktop analysers to both CVS and third-party practices and employs a national
courier network to facilitate the collection and timely processing of samples
from practices across the UK. The Group continues to develop its capability to
ensure it can support the wider Group focus on growing diagnostic care.
The revenue performance in the period was impacted by a loss of a major
contract along with increased inflationary pressures which led to EBITDA
falling vs H1 2024.
Crematoria (1.8%*)
CVS's Crematoria division provides both individual and communal cremation
services for companion animal and equine clients as well as clinical waste
disposal services, for both CVS and third-party veterinary practices.
The positive revenue performance and adjusted EBITDA growth in the division
continues to be driven by the Direct Pet Cremation service, which puts
customers directly in contact with crematoria to make pet aftercare
arrangements, giving them more time to consider their range of options which
has resulted in significant changes to customers' choices and generated
improved customer care.
Online retail business (6.6%*)
The Group's online pet food and retailer "Animed Direct" focuses on supplying
pet food and prescription and non-prescription medicine directly to customers.
Although trading was challenging for Animed Direct in H1 2025, the launch of a
new website in February 2025 will bring future growth whilst also enhancing
the customers' user experience.
* Revenue share for continuing operations before intercompany sales
between practices and other divisions.
Cash flow and movement in net debt
H1 2025 H1 2024 FY 2024
(unaudited) (unaudited) (audited)
£m £m £m
Adjusted EBITDA 67.4 64.5 127.3
Working capital movements (5.0) (9.8) (12.5)
Capital expenditure - maintenance (6.4) (5.4) (10.3)
Repayment of right-of-use liabilities (7.5) (7.5) (14.8)
Operating cash flow 48.5 41.8 89.7
Operating cash conversion (%) 72.0% 64.8% 70.5%
Taxation paid (8.3) (3.5) (15.7)
Net interest paid (8.8) (4.6) (12.0)
Free cash flow 31.4 33.7 62.0
Capital expenditure - investment (10.4) (11.5) (32.2)
Business combinations (net of cash acquired)/other investments (23.3) (63.1) (96.2)
Contingent consideration and acquisition costs (5.5) (5.8) (11.6)
Dividends paid (5.8) (5.4) (5.5)
Other financing activities (1.4) (1.1) (5.3)
Cash movement in relation to discontinued operations - (2.0) (4.6)
Impact of foreign exchange 0.1 - (0.6)
Net outflow (14.9) (55.2) (94.0)
Decrease in unamortised borrowing costs (0.4) (0.7) (0.1)
Increase/(decrease) in net debt 15.3 (55.9) (94.1)
The Group's operating cash flow for continuing operations increased by 16.0%
to £48.5m (H1 2024: £41.8m) with the increase in adjusted EBITDA and
favourable working capital movements vs the prior period; partially offset by
an increase in maintenance capital expenditure. In the prior year, an RDEC
receipt of £5.1m was included as a reduction in tax paid, pending
confirmation of the balance with HMRC, which was subsequently included within
working capital at the year end.
The Group's operating cash conversion of 72.0% was in line with expectations
set at our Capital Markets Day in November 2022.
Free cash flow decreased 6.8% to £31.4m from £33.7m with an increase in
finance expense from increases in both cost of borrowing and net debt to
support our strategy of investment in our practices and acquisitions.
Net debt increased by £15.3m to £180.1m from £164.8m at FY 2024 mainly from
an increase in acquisition investment of £23.3m (H1 2024: £63.1m, FY 2024:
£96.2m) and continued focus on investment in practice facilities of £16.8m
(H1 2024: excluding discontinued operations of £16.9m, including discontinued
operations of £17.2m) (FY 2024 excluding discontinued operations of £42.5m,
including discontinued operations of £43.1m). In addition there were cash
outflows in the year for exceptional costs and an increase in contingent and
acquisition costs from an increase in the number of acquisitions made during
the year and prior years.
Net debt
H1 2025 H1 2024 FY 2024
(unaudited) (unaudited) (audited)
£m £m £m
Borrowings repayable:
Within one year - - -
After more than one year:
Loan facility 194.5 161.5 184.5
Unamortised borrowing costs (2.8) (2.9) (3.2)
Total borrowings 191.7 158.6 181.3
Cash and cash equivalents (11.6) (32.3) (16.5)
Net debt 180.1 126.3 164.8
The Group's loan facility comprises a £87.5m term loan and £262.5m revolving
credit facility. This facility is supported by eight banks and runs until
February 2028. The facility has two key financial covenants:
• net debt to bank-test EBITDA of not more than 3.25x; and
• the bank-test EBITDA to interest ratio of not less than 4.5x.
Bank-test EBITDA is based on the last twelve months' adjusted EBITDA
performance annualised for the effect of acquisitions deducting costs relating
to acquisition fees and adding back share option expense, prior to the
adoption of IFRS 16.
The Group manages its banking arrangements centrally. Funds are swept daily
from its various bank accounts into central bank accounts to optimise the
Group's net interest payable position.
Interest rate risk is also managed centrally and derivative instruments are
used to mitigate this risk. The Group has two fixed interest rate swap
arrangements to hedge fluctuations in interest rates on £100.0m of its loan
facility, which ends in February 2028. Interest cover at 31 December 2024 was
9.56x (FY 2024: 14.06x).
The Group continues to have a strong balance sheet coupled with the ability to
generate cash, which enables it to effectively manage working capital. The
Group targets a long-term net debt to EBITDA ratio of less than 2.0x and
closely monitors this in line with acquisition investment opportunities.
Leverage at 31 December 2024 was 1.66x (FY 2024: 1.54x)
Dividend
A dividend of 8.0p (December 2023: 7.5p) per share was paid in November 2024
in respect of the financial year ended 30 June 2024. The Board will continue
to review its dividend policy and anticipates the payment of a final dividend
in respect of the current financial year, which will be payable in December
2025. In line with the Group's customary practice, the amount of this dividend
will be dependent on the outcome of the full year results and the growth
capital needs of the business.
Current trading and Outlook
CVS has laid the foundations for further growth and is well positioned to
benefit from the sizeable veterinary services market and continued
humanisation of pets. The Board remains confident in the Group's ability to
deliver sustainable long-term growth and its strategic goals.
Whilst CVS is naturally adapting its capital allocation and looking for
efficiencies to offset recently announced UK employment cost increases, the
Group's strategy for growth remains largely unchanged and CVS continues to
execute this.
Although trading continues to be impacted by a softer market, the wider
macroeconomic backdrop and inflationary pressures on margins over the near
term, the Board remains confident that full year results will be in line with
market expectations and the strategy remains appropriate to deliver longer
term sustainable growth in value.
CVS has a healthy balance sheet and free cash flows in support of further
investment with funding in place through to February 2028 and leverage
maintained well below 2.0x. The Group will continue to focus its investment on
people, technology and Australian acquisitions in order to support further
growth.
The Board would like to acknowledge and thank all members of the CVS team for
their support in providing the very best care for animals, and looks forward
to sharing continued success in the future.
David Wilton
Chair
27 February 2025
Condensed consolidated income statement for the six-month period ended 31 December 2024 (unaudited)
Note Six months ended 31 December 2024 (Unaudited) Six months ended 31 December 2023(1) (Unaudited) £m Year ended 30 June 2024 (Audited) £m
£m
Continuing operations
Revenue 341.8 320.5 647.3
Cost of sales (193.1) (180.7) (369.4)
Gross profit 148.7 139.8 277.9
Administrative expenses (122.3) (108.2) (227.1)
Operating profit 26.4 31.6 50.8
Finance expense 5 (9.0) (4.8) (12.6)
Profit before tax 17.4 26.8 38.2
Tax expense 8 (6.1) (8.7) (11.8)
Profit from continuing operations 11.3 18.1 26.4
Loss from discontinued operations - (3.4) (20.0)
Profit for the period 11.3 14.7 6.4
Profit for the period attributable to:
Owners of the parent 11.2 14.6 6.2
Non-controlling interests 0.1 0.1 0.2
11.3 14.7 6.4
Earnings per Ordinary share (EPS) for profit from continuing operations
attributable to the ordinary equity holders of the Company:
Basic 6 15.6p 25.2p 36.5p
Diluted 6 15.6p 25.2p 36.5p
Earnings per Ordinary share (EPS) for profit attributable to the ordinary
equity holders of the Company:
Basic 6 15.6p 20.4p 8.6p
Diluted 6 15.6p 20.4p 8.6p
(1.) Six months ended 31 December 2023 has been re-presented following the
classification of the Netherlands and Republic of Ireland operations as
discontinued operations in FY 2024.
Reconciliation of alternative performance measures
The Directors believe that adjusted measures, being adjusted EBITDA, adjusted
PBT and adjusted EPS provide additional useful information for shareholders.
These measures are used by the Board and management for planning, internal
reporting and setting Director and management remuneration. In addition, they
are used by the investor analyst community and are aligned to our strategy and
KPIs. These measures are not defined by IFRS and therefore may not be directly
comparable with other companies' adjusted measures.
Adjusted EBITDA is calculated by reference to profit before tax for continuing
operations, adjusted for interest (net finance expense), depreciation,
amortisation, costs relating to business combinations and exceptional items.
The following table provides the calculation of adjusted EBITDA:
Alternative performance measure: adjusted EBITDA Note Six months ended 31 December 2024 (Unaudited) Six months ended 31 December 2023(1) (Unaudited) Year ended 30 June 2024 (Audited) £m
£m
£m
Profit before tax from continuing operations 17.4 26.8 38.2
Adjustments for:
Finance expense 5 9.0 4.8 12.6
Amortisation of intangible assets 9 12.7 11.7 24.8
Depreciation of property, plant and equipment 9 11.1 7.7 17.7
Depreciation of right-of-use assets 9 8.5 7.5 16.0
Depreciation and amortisation attributable to discontinued operations - (1.5) (2.6)
Profit on disposal of property, plant and equipment and right-of-use (0.4) (0.1) (0.3)
assets
Costs relating to business combinations(2) 7.6 7.5 15.1
Exceptional items(3) 1.5 0.1 5.8
Adjusted EBITDA 67.4 64.5 127.3
Adjusted earnings per share (EPS):
Adjusted EPS 6 40.0p 48.3p 86.6p
Diluted adjusted EPS 6 40.0p 48.2p 86.5p
(1.) Six months ended 31 December 2023 has been re-presented following the
classification of the Netherlands and Republic of Ireland operations as
discontinued operations in FY 2024.
(2.) Includes amounts accrued in respect of contingent consideration in
relation to acquisitions in prior years expensed to the income statement and
acquisition fees.
(3.) Exceptional items relate to costs incurred in relation with the
Competition and Markets Authority market investigation of £1.1m and
restructuring costs of £0.4m. Further information on 2024 exceptional costs
is available in note 6 for the 2024 Annual report.
Condensed consolidated statement of comprehensive income for the six-month period ended 31 December 2024 (unaudited)
Year ended 30 June 2024 (Audited)
Six months ended 31 December 2024 (Unaudited) Six months ended 31 December 2023 (Unaudited) £m
£m
£m
Profit for the period 11.3 14.7 6.4
Other comprehensive (expense) / income - items that will or may be reclassified to profit or loss in future periods
Cash flow hedges:
Net movement on cash flow hedge (0.1) (1.8) (1.2)
Deferred tax on cash flow hedge - 0.5 0.3
Exchange differences on translation of foreign operations (5.5) 1.6 0.6
Other comprehensive (expense) / income for the period, net of tax (5.6) 0.3 (0.3)
Total comprehensive income for the period 5.7 15.0 6.1
Total comprehensive income for the period attributable to:
Owners of the parent 5.6 14.9 5.9
Non-controlling interests 0.1 0.1 0.2
Total comprehensive income for the period 5.7 15.0 6.1
Total comprehensive income/ (loss) for period attributable to owners of CVS Group plc:
Continuing operations 5.6 18.3 26.1
Discontinued operations - (3.4) (20.2)
5.6 14.9 5.9
Condensed consolidated statement of financial position as at 31 December 2024 (unaudited)
Note 31 December 31 December 30 June 2024
(Audited)
2024 2023
£m
(Unaudited) (Unaudited)
£m £m
Non-current assets
Intangible assets 9 344.9 321.7 334.9
Property, plant and equipment 9 126.5 111.3 123.0
Right-of-use assets 9 99.1 105.7 102.6
Derivative financial instruments 0.8 - 0.9
571.3 538.7 561.4
Current assets
Inventories 30.3 28.5 31.8
Trade and other receivables 60.5 58.2 67.7
Derivative financial instruments - 0.3 -
Current tax receivable 22.5 2.8 12.6
Cash and cash equivalents 11.6 32.3 16.5
124.9 122.1 128.6
Total assets 696.2 660.8 690.0
Current liabilities
Trade and other payables 11 (97.5) (91.2) (102.6)
Provisions (0.6) (0.8) (0.9)
Current tax liabilities (3.7) - (0.7)
Lease liabilities 12 (14.0) (14.0) (13.9)
(115.8) (106.0) (118.1)
Non-current liabilities
Borrowings (191.7) (158.6) (181.3)
Lease liabilities 12 (89.8) (95.7) (92.6)
Deferred tax liabilities (37.5) (34.2) (37.5)
(319.0) (288.5) (311.4)
Total liabilities (434.8) (394.5) (429.5)
Net assets 261.4 266.3 260.5
Condensed consolidated statement of financial position as at 31 December 2024 (unaudited)
31 December 2024 31 December 2023
(Unaudited) (Unaudited) 30 June 2024
£m £m (Audited)
£m
Shareholders' equity
Share capital 0.1 0.1 0.1
Share premium 109.1 107.1 109.0
Capital redemption reserve 0.6 0.6 0.6
Treasury reserve - (0.9) -
Cash flow hedge reserve 0.4 0.1 0.5
Merger reserve (61.4) (61.4) (61.4)
Foreign exchange translation reserve (5.1) 1.4 0.4
Retained earnings 217.6 219.2 211.2
261.3 266.2 260.4
Non-controlling interest 0.1 0.1 0.1
Total equity 261.4 266.3 260.5
The interim financial information above is reproduced from that on pages 14 to 38 of the Group's Interim Report which was approved by the Board of Directors on 27 February 2025.
Condensed consolidated statement of changes in equity for the six-month period ended 31 December 2024 (unaudited)
Share premium Capital redemption reserve Treasury reserve Cash flow hedge reserve Merger reserve Foreign exchange transaction reserve Retained earnings Total Non- controlling interest Total equity
Share capital
£m £m £m £m £m £m £m £m £m £m £m
At 1 July 2024 0.1 109.0 0.6 - 0.5 (61.4) 0.4 211.2 260.4 0.1 260.5
Profit for the period - - - - - - - 11.2 11.2 0.1 11.3
Other comprehensive income and loss
Cash flow hedges: Fair value loss - - - - (0.1) - - - (0.1) - (0.1)
Exchange differences on translation of foreign operations - - - - - - (5.5) - (5.5) - (5.5)
Deferred tax on cash flow hedge - - - - - - - - - - -
Total other comprehensive loss - - - - (0.1) - (5.5) - (5.6) - (5.6)
Total comprehensive (loss) / income - - - - (0.1) - (5.5) 11.2 5.6 0.1 5.7
Transactions with owners:
Issue of Ordinary shares - 0.1 - - - - - - 0.1 - 0.1
Credit to reserves for share-based payments (note 7) - - - - - - - 0.9 0.9 - 0.9
Deferred tax relating to share-based payments - - - - - - - - - - -
Purchase of Treasury shares - - - - - - - - - - -
Dividends paid (note 15) - - - - - - - (5.7) (5.7) (0.1) (5.8)
Transactions with owners - 0.1 - - - - - (4.8) (4.7) (0.1) (4.8)
At 31 December 2024 0.1 109.1 0.6 - 0.4 (61.4) (5.1) 217.6 261.3 0.1 261.4
Condensed consolidated statement of changes in equity for the six-month period ended 31 December 2023 (unaudited)
Share premium Capital redemption reserve Treasury reserve Cash flow hedge reserve Merger reserve Foreign exchange transaction reserve Retained earnings Total Non- controlling interest Total equity
Share capital
£m £m £m £m £m £m £m £m £m £m £m
At 1 July 2023 0.1 107.0 0.6 - 1.4 (61.4) (0.2) 209.1 256.6 - 256.6
Profit for the period - - - - - - - 14.6 14.6 0.1 14.7
Other comprehensive income and loss
Cash flow hedges: Fair value loss - - - - (1.8) - - - (1.8) - (1.8)
Exchange differences on translation of foreign operations - - - - - - 1.6 - 1.6 - 1.6
Deferred tax on cash flow hedge - - - - 0.5 - - - 0.5 - 0.5
Total other comprehensive (loss) / income - - - - (1.3) - 1.6 - 0.3 - 0.3
Total comprehensive (loss) / income - - - - (1.3) - 1.6 14.6 14.9 0.1 15.0
Transactions with owners:
Issue of Ordinary shares - 0.1 - - - - - - 0.1 - 0.1
Credit to reserves for share-based payments (note 7) - - - - - - - 1.4 1.4 - 1.4
Deferred tax relating to share-based payments - - - - - - - (0.5) (0.5) - (0.5)
Purchase of Treasury shares - - - (0.9) - - - - (0.9) - (0.9)
Dividends paid (note 15) - - - - - - - (5.4) (5.4) - (5.4)
Transactions with owners - 0.1 - (0.9) - - - (4.5) (5.3) - (5.3)
At 31 December 2023 0.1 107.1 0.6 (0.9) 0.1 (61.4) 1.4 219.2 266.2 0.1 266.3
Condensed consolidated statement of cash flows for the six-month period ended 31 December 2024 (unaudited)
Note Six months ended 31 December 2024 Six months ended 31 December 2023 Year ended 30 June 2024
(Unaudited) (Unaudited) (Audited)
£m
£m
£m
Cash flows from operating activities
Cash generated from operations 13 56.9 47.8 101.8
Taxation paid (8.3) (3.5) (15.7)
Interest paid (8.8) (4.8) (12.4)
Exceptional items (1.5) (0.1) (5.9)
Net cash generated from operating activities 38.3 39.4 67.8
Cash flows from investing activities
Business combinations (net of cash acquired) 10 (23.3) (63.1) (97.0)
Purchase of property, plant and equipment 9 (13.6) (15.7) (39.5)
Proceeds from sale of property, plant and equipment - 0.1 0.2
Purchase of intangible assets 9 (3.2) (1.5) (3.6)
Payments for financial assets at amortised cost - - (0.6)
Net cash used in investing activities (40.1) (80.2) (140.5)
Cash flows from financing activities
Dividends paid to Company's shareholders 15 (5.7) (5.4) (5.4)
Dividends paid to non-controlling interests in subsidiaries (0.1) - (0.1)
Proceeds from issue of Ordinary shares 0.1 0.1 2.0
Proceeds from sale of Treasury shares - - 0.4
Purchase of Treasury shares - (0.9) (0.9)
Repayment of obligation under right-of-use assets (7.5) (7.9) (15.6)
Debt issuance costs - - (0.8)
Repayment of borrowings - (0.3) (0.3)
Increase of borrowings 10.0 66.0 89.0
Net cash generated (used in)/from financing activities (3.2) 51.6 68.3
Effects of exchange rate changes 0.1 - (0.6)
Net (decrease)/increase in cash and cash equivalents (4.9) 10.8 (5.0)
Cash and cash equivalents at the beginning of period 16.5 21.5 21.5
Cash and cash equivalents at end of the period 11.6 32.3 16.5
Notes to the interim consolidated financial information
1. General information
The principal activity of CVS Group plc, together with its subsidiaries ("the
Group") is to operate veterinary practices, complementary veterinary
diagnostic businesses, pet crematoria and an online pharmacy and retail
business.
CVS Group plc is a public limited company incorporated under the Companies Act
2006 and domiciled in England and Wales and its shares are quoted on the AIM
Market of the London Stock Exchange ("CVSG"). Its company registration number
is 06312831 and registered office is CVS House, Owen Road, Diss, IP22 4ER.
This interim consolidated financial information does not constitute statutory
accounts within the meaning of Section 434 of the Companies Act 2006. The
statutory accounts of CVS Group plc in respect of the year ended 30 June 2024
have been delivered to the Registrar of Companies, upon which the Company's
auditors have given a report which was unqualified and did not contain any
statement under Section 498 of the Companies Act 2006.
Forward looking statements
Certain statements in this interim report are forward-looking. Although the
Group believes that the expectations reflected in these forward-looking
statements are reasonable, we can give no assurance that these expectations
will prove to have been correct. Because these statements involve risks and
uncertainties, actual results may differ materially from those expressed or
implied by these forward-looking statements. Save as required by regulation or
law, we undertake no obligation to update any forward-looking statements
whether as a result of new information, future events or otherwise.
2. Basis of preparation
The interim consolidated financial information of CVS Group plc is for the six
months ended 31 December 2024. It is unaudited and has been prepared in
accordance with the AIM Rules for Companies and with IAS 34, 'Interim
Financial Reporting'. The interim consolidated financial information should be
read in conjunction with the annual financial statements for the year ended 30
June 2024, which have been prepared in accordance with international
accounting standards and in conformity with the requirements of the Companies
Act 2006.
The interim consolidated financial information has been prepared on a going
concern basis.
Use of alternative performance measures
The Directors believe that adjusted performance measures provide additional
useful information for shareholders. These measures are used by the Board and
management for planning, internal reporting and setting Director and
management remuneration. In addition, they are used by the investor analyst
community and are aligned to our strategy and KPls. These measures are not
defined by International Financial Reporting Standards (IFRS) and therefore
may not be directly comparable with other companies' adjusted measures. They
are not intended to be a substitute for, or superior to, IFRS measurements of
profit or earnings per share.
Adjusted Earnings Before Interest, Tax, Depreciation and Amortisation
(adjusted EBITDA), adjusted profit before tax (adjusted PBT) and adjusted
earnings per share (adjusted EPS)
Adjusted EBITDA is calculated by reference to profit before tax for continuing
operations, adjusted for interest (net finance expense), depreciation,
amortisation, costs relating to business combinations and exceptional items.
An exceptional item is where the item is deemed to be outside the ordinary
course of business or where the value of the item is such that it distorts the
view of performance from the underlying ongoing business and operations.
Adjusted PBT is calculated as profit before tax, amortisation, costs relating
to business combinations and exceptional items.
Adjusted EPS is calculated as adjusted PBT attributable to the owners of CVS
Group plc, less applicable tax, divided by the weighted average number of
Ordinary shares in issue in the period.
The following table provides the calculation of adjusted EBITDA as defined
above:
Alternative performance measure: adjusted EBITDA Note Six months ended 31 December 2024 (Unaudited) Six months ended 31 December 2023(1) (Unaudited) Year ended 30 June 2024 (Audited) £m
£m
£m
Profit before tax from continuing operations 17.4 26.8 38.2
Adjustments for:
Finance expense 5 9.0 4.8 12.6
Amortisation of intangible assets 9 12.7 11.7 24.8
Depreciation of property, plant and equipment 9 11.1 7.7 17.7
Depreciation of right-of-use assets 9 8.5 7.5 16.0
Depreciation and amortisation attributable to discontinued operations - (1.5) (2.6)
Profit on disposal of property, plant and equipment and right-of-use (0.4) (0.1) (0.3)
assets
Costs relating to business combinations(2) 7.6 7.5 15.1
Exceptional items(3) 1.5 0.1 5.8
Adjusted EBITDA 67.4 64.5 127.3
Adjusted earnings per share (EPS):
Adjusted EPS 6 40.0p 48.3p 86.6p
Diluted adjusted EPS 6 40.0p 48.2p 86.5p
(1.) Six months ended 31 December 2023 has been re-presented following the
classification of the Netherlands and Republic of Ireland operations as
discontinued operations in FY 2024.
(2.) Includes amounts accrued in respect of contingent consideration in
relation to acquisitions in prior years expensed to the income statement and
acquisition fees.
(3.) Exceptional items relate to costs incurred in relation with the
Competition and Markets Authority market investigation of £1.1m and
restructuring costs of £0.4m.Further information on 2024 exceptional costs is
available in note 6 for the 2024 Annual report.
Net debt
Net debt is calculated as bank borrowings less gross cash and cash equivalents
and unamortised borrowing costs.
Six months ended 31 December 2024 (Unaudited) Six months ended 31 December 2023 (Unaudited) £m Year ended 30 June 2024 (Audited)
£m
£m
Borrowings repayable after more than one year
Loan facility 194.5 161.5 184.5
Unamortised borrowing costs (2.8) (2.9) (3.2)
Total borrowings 191.7 158.6 181.3
Cash and cash equivalents (11.6) (32.3) (16.5)
Net debt 180.1 126.3 164.8
For bank covenant reporting, an alternative calculation for net debt is used.
This definition can be found in note 3 of the 2024 Annual Report.
Leverage
Leverage on a bank test basis is drawn bank debt less cash and cash
equivalents, divided by adjusted EBITDA annualised for the effect of
acquisitions, including costs relating to acquisition fees and excluding share
option costs, prior to the adoption of IFRS 16.
Net bank borrowings
Net bank borrowings is drawn bank debt less cash and cash equivalents.
Like-for-like sales
Like-for-like sales show revenue generated from like-for-like continuing
operations compared to the prior year, adjusted for the number of working
days. For example, for a practice acquired in September 2023, revenue is
included from September 2024 in the like-for-like calculations.
Operating cash conversion
Operating cash conversion is defined as cash flows from operating activities
adjusted for discontinued operations, acquisition fees and contingent
consideration paid, less lease liability repayment and maintenance capital
expenditure; divided by adjusted EBITDA.
Free cash flow
Free cash flow is defined as cash flows from operating activities adjusted for
discontinued operations, acquisition fees and contingent consideration paid,
less lease liability repayment, maintenance capital expenditure, net interest
paid and taxation paid.
3. Summary of significant accounting policies
The accounting policies adopted are consistent with those set out on pages 108
to 117 of the consolidated financial statements of CVS Group plc for the year
ended 30 June 2024 (which are available upon request from the Company's
registered office or on the Company's website).
The policy for recognising and measuring taxation in the interim period is
described in note 8.
Critical accounting estimates and judgements
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates
and assumptions that affect the application of policies and reported amounts
of assets and liabilities, and income and expenses. The estimates and
associated assumptions are based on historical experience and various other
factors that are believed to be reasonable under the circumstances, the
results of which form a basis for making the judgements about carrying values
of assets and liabilities that are not readily apparent from other sources.
4. Segment reporting
Segment information is presented in respect of the Group's business and
geographical segments. The primary format, operating segments, is based on the
Group's management and internal reporting structure and monitored by the
Group's Chief Operating Decision Maker (CODM).
Segment results, assets and liabilities include items directly attributable to
a segment as well as those that can be allocated on a reasonable basis.
Unallocated items comprise mainly interest-bearing borrowings and associated
costs, tax-related assets and liabilities, costs relating to business
combinations, and support function salary and premises costs.
Revenue comprises £242.5m of fees and £99.3m of goods (31 December 2023:
£234.0m and £86.5m respectively).
Operating segments
The Group is split into four operating segments (Veterinary Practices,
Laboratories, Crematoria and Online Retail Business) and a centralised support
function (Central administration) for business segment analysis. In
identifying these operating segments, management generally follows the Group's
service lines representing its main products and services.
Each of these operating segments is managed separately as each segment
requires different specialisms, marketing approaches and resources.
Intra-group sales eliminations are included within the Central administration
segment. Central administration includes costs relating to the employees and
property and other overhead costs associated with the centralised support
function together with finance costs arising on the Group's borrowings.
Veterinary Practices Laboratories Crematoria Online Retail Business Central Administration Group Discontinued operations
Six-months ended £m £m £m £m £m £m £m
31 December 2024
Revenue 308.4 15.6 6.2 23.5 (11.9) 341.8 -
Adjusted EBITDA 65.0 4.5 2.3 1.1 (5.5) 67.4 -
Profit/(loss) before tax 26.3 3.9 1.8 1.1 (15.7) 17.4 -
Total assets 547.3 56.4 31.3 24.6 36.6 696.2 -
Total liabilities (177.7) (3.0) (2.4) (18.6) (233.1) (434.8) -
Reconciliation of adjusted EBITDA
Profit/(loss) before tax 26.3 3.9 1.8 1.1 (15.7) 17.4 -
Finance expense (note 5) 2.4 - - - 6.6 9.0 -
Amortisation of intangible assets (note 9) 12.6 - 0.1 - - 12.7 -
Depreciation of property, plant and equipment (note 9) 9.9 0.6 0.4 - 0.2 11.1 -
Depreciation of right-of-use assets (note 9) 8.2 - - - 0.3 8.5 -
Profit on disposal of property, plant and equipment and right-of-use assets (0.4) - - - - (0.4) -
Costs relating to business combinations 5.9 - - - 1.7 7.6 -
Exceptional items 0.1 - - - 1.4 1.5 -
Adjusted EBITDA 65.0 4.5 2.3 1.1 (5.5) 67.4 -
Laboratories Crematoria £m Online Retail Business Central Administration Group Discontinued operations
Six-months ended Veterinary Practices £m £m £m £m £m
31 December 2023(1) £m
Revenue 285.4 16.3 6.0 25.0 (12.2) 320.5 9.4
Adjusted EBITDA 61.0 5.3 2.1 1.7 (5.6) 64.5 (1.5)
Profit/(loss) before tax 32.9 4.8 1.7 1.7 (14.3) 26.8 (3.4)
Total assets 544.9 46.4 24.5 24.3 20.7 660.8 -
Total liabilities (179.2) (1.5) (1.7) (19.3) (192.8) (394.5) -
Reconciliation of adjusted EBITDA
Profit/(loss) before tax 32.9 4.8 1.7 1.7 (14.3) 26.8 (3.4)
Finance expense (note 5) 1.8 - - - 3.0 4.8 0.4
Amortisation of intangible assets(2) (note 9) 11.0 - - - - 11.0 0.7
Depreciation of property, plant and equipment (note 9) 6.2 0.5 0.4 - 0.2 7.3 0.4
Depreciation of right-of-use assets (note 9) 6.8 - - - 0.3 7.1 0.4
Profit on disposal of property, plant and equipment and right-of-use assets (0.1) - - - - (0.1) -
Costs relating to business combinations 2.3 - - - 5.2 7.5 -
Exceptional items 0.1 - - - - 0.1 -
Adjusted EBITDA 61.0 5.3 2.1 1.7 (5.6) 64.5 (1.5)
(1.) Six months ended 31 December 2023 has been re-presented following the
classification of the Netherlands and Republic of Ireland operations as a
discontinued operation in FY 2024.
(2.) Amortisation in prior period reclassified as veterinary practice
Laboratories Crematoria £m Online Retail Business Central Administration Group Discontinued operations
Veterinary Practices £m £m £m £m £m
Year ended 30 June 2024 £m
Revenue 577.5 31.6 12.0 50.0 (23.8) 647.3 17.5
Adjusted EBITDA 120.1 9.2 4.3 3.3 (9.6) 127.3 (2.1)
Profit/(loss) before tax 56.7 8.0 3.6 3.2 (33.3) 38.2 (5.5)
Total assets 567.6 49.3 25.9 21.2 26.0 690.0 -
Total liabilities (190.0) (2.2) (2.3) (15.5) (219.5) (429.5) -
Reconciliation of adjusted EBITDA
Profit/(loss) before tax 56.7 8.0 3.6 3.2 (33.3) 38.2 (5.5)
Finance expense (note 5) 3.9 - - - 8.7 12.6 0.8
Amortisation of intangible assets (note 9) 23.4 - 0.1 0.1 - 23.6 1.2
Depreciation of property, plant and equipment (note 9) 14.9 1.0 0.7 - 0.4 17.0 0.7
Depreciation of right-of-use assets (note 9) 14.6 0.1 - - 0.6 15.3 0.7
Profit on disposal of property, plant and equipment and right-of-use assets (0.2) - (0.1) - - (0.3) -
Costs relating to business combinations 6.1 - - - 9.0 15.1 -
Exceptional items 0.7 0.1 - - 5.0 5.8 -
Adjusted EBITDA 120.1 9.2 4.3 3.3 (9.6) 127.3 (2.1)
Geographical segments
The business operates predominantly in the UK. As at 31 December 2024, it has
36 veterinary practice sites in Australia. It performs a small amount of
laboratory work and teleradiology work for Europe-based clients and a small
amount of teleradiology work for clients based in the rest of the world. In
accordance with IFRS 8, 'Operating Segments', no segment results are presented
for operations in Australia as it meets the aggregation criteria, or trade
with clients in Europe or the rest of the world which is not considered
material for separate disclosure. Neither Australia or trade with clients in
Europe and the rest of the world are reported separately for management
reporting purposes.
5. Finance expense
Six months ended 31 December 2024 Six months ended 31 December 2023(1) Year ended
(Unaudited) (Unaudited) 30 June
£m £m 2024
(Audited)
£m
Interest expense on bank loans and overdraft 6.1 2.3 7.4
Interest expense on lease liabilities 2.5 2.1 4.3
Amortisation of debt arrangement fees 0.4 0.4 0.9
Net finance expense 9.0 4.8 12.6
(1.) Six months ended 31 December 2023 has been re-presented following the
classification of the Netherlands and Republic of Ireland operations as
discontinued operation in FY 2024.
Finance expense including within loss from discontinued operations, not including above, is £nil (31 December 2023: £0.4m, FY 2024: £0.8m).
6. Earnings per Ordinary share
(a) Reconciliation of earnings
Six months ended 31 December 2024 Six months ended 31 December 2023(1) Year ended
(Unaudited) (Unaudited) 30 June
£m £m 2024
(Audited)
£m
Profit from continuing operations 11.3 18.1 26.4
Profit attributable to non-controlling interest (0.1) (0.1) (0.2)
Profit for the year from continuing operations attributable to equity holders 11.2 18.0 26.2
of the Company
Loss for the year from discontinued operations attributable to equity holders - (3.4) (20.0)
of the Company
Profit for the year attributable to the equity holders of the Company 11.2 14.6 6.2
(b) Basic
Basic earnings per share is calculated by dividing the profit after taxation by the weighted average number of shares in issue during the period.
Six months ended 31 December 2024 Six months ended 31 December 2023(1) Year ended
(Unaudited) (Unaudited) 30 June
2024
(Audited)
Weighted average number of Ordinary shares in issue 71,739,444 71,508,834 71,595,871
Basic earnings per share from continuing operations 15.6 25.2 36.5
attributable to equity holders of the Company (pence)
Basic earnings per share from discontinued operations - (4.8) (27.9)
attributable to equity holders of the Company (pence)
Total basic earnings per share attributable to the ordinary equity holders of 15.6 20.4 8.6
the Company (pence)
(c) Diluted
Diluted earnings per share is calculated by adjusting the weighted average
number of Ordinary shares outstanding to assume conversion of all dilutive
potential Ordinary shares. The Company has potentially dilutive Ordinary
shares, being the contingently issuable shares under the Group's Long-Term
Incentive Plan (LTIP) schemes and Save-As-You-Earn (SAYE) schemes. For share
options, a calculation is undertaken to determine the number of shares that
could have been acquired at fair value (determined as the average annual
market share price of the Company's shares) based on the monetary value of the
subscription rights attached to outstanding share options. The number of
shares calculated as above is compared with the number of shares that would
have been issued assuming the exercise of the share options.
Six months ended 31 December 2024 Six months ended 31 December 2023(1) Year ended
(Unaudited) (Unaudited) 30 June
2024
(Audited)
Weighted average number of Ordinary shares in issue 71,739,444 71,508,834 71,595,871
Adjustment for contingently issuable shares - LTIP schemes - 113,803 -
Adjustment for contingently issuable shares - SAYE schemes 1,326 27,594 60,844
Weighted average number of Ordinary shares for diluted earnings per share 71,740,770 71,650,231 71,656,715
Diluted earnings per share from continuing operations 15.6 25.2 36.5
attributable to equity holders of the Company (pence)
Diluted earnings per share from discontinued operations - (4.8) (27.9)
attributable to equity holders of the Company (pence)
Total diluted earnings per share attributable to the ordinary equity holders 15.6 20.4 8.6
of the Company (pence)
(d) Alternative performance measure: adjusted earnings per share
Six months ended 31 December 2024 Six months ended 31 December 2023(1) Year ended
(Unaudited) (Unaudited) 30 June
£m £m 2024
(Audited)
£m
Profit before tax from continuing operations 17.4 26.8 38.2
Adjustments for:
Amortisation of intangible assets 12.7 11.7 24.8
Amortisation of intangible assets attributable to discontinued operations - (0.8) (1.2)
Costs relating to business combinations 7.6 7.5 15.1
Exceptional items 1.5 0.1 5.8
Adjusted profit before tax 39.2 45.3 82.7
Tax expense amended for the above adjustments (10.4) (10.7) (20.4)
Adjusted profit after tax 28.8 34.6 62.3
Less: Adjusted profit after tax attributable to non-controlling interest (0.1) (0.1) (0.2)
Adjusted profit after tax attributable to the parent 28.7 34.5 62.1
Weighted average number of Ordinary shares in issue 71,739,444 71,508,834 71,595,871
Weighted average number of Ordinary shares for diluted earnings per share 71,740,770 71,650,231 71,656,715
Adjusted earnings per share (pence) 40.0 48.3 86.6
Diluted adjusted earnings per share (pence) 40.0 48.2 86.5
(1.) Six months ended 31 December 2023 has been re-presented following the
classification of the Netherlands and Republic of Ireland operations as
discontinued operation in FY 2024.
7. Share-based payments
Long-Term Incentive Plans
The Group operates incentive schemes for certain senior executives and others,
the CVS Group Long-Term Incentive Plan (LTIP).
Under the LTIP schemes, awards are made at an effective nil cost. Schemes vest
over a three-year performance period conditional upon the Group's adjusted
earnings per share growth and Total Shareholder Return (TSR) with the
exception of LTIP 16 (b) and LTIP 16 (c), which vest over a three-year period
but are not conditional on performance. The LTIP scheme arrangements are a
mixture of equity-settled and cash-settled. Cash-settled LTIP schemes are
linked to a number of shares, the value of which is settled in cash upon
exercise.
The following LTIP schemes were issued in the period for the six months ended
31 December 2024:
LTIP 18 LTIP 18(b) LTIP 18 (c)
Issue date 4 October 2024 4 October 2024 4 November 2024
Option life 3 years 3 years 3 years
Number of shares 197,820 1,352 3,181
Share price at grant date £11.51 £11.51 £9.43
Exercise price 0.2p 0.2p 0.2p
Settlement Equity-settled Cash-settled Equity-settled
During the six months to 31 December 2024, Directors and employees exercised
nil share options (31 December 2023: 107,903) with a weighted average share
price at the date of exercise of £nil (31 December 2023: £16.17) in respect
of the LTIP 15 (31 December 2023: LTIP 14) scheme.
Options are valued using the Monte-Carlo option pricing model and
Black-Scholes option pricing models. The share-based payment charge for the
period in respect of the options issued under the LTIP schemes amounted to
£0.2m (31 December 2023: £0.6m), which has been charged to administrative
expenses. National Insurance contributions amounting to £nil (31 December
2023: £0.1m) have been accrued in respect of the LTIP scheme transactions and
are treated as cash-settled transactions.
Save As You Earn (SAYE)
The Group operates an incentive scheme for all employees, the CVS Group SAYE
plan, an HM Revenue & Customs-approved scheme. Under the new SAYE17
scheme, awards were made at a 10.0% discount ( SAYE16, SAYE15, SAYE14 and
SAYE13 were made at a 20.0% discount) of the closing mid-market price on date
of invitation, vesting over a three-year period. There are no performance
conditions attached to the SAYE schemes.
SAYE17 was opened for subscription in November 2024 with 612,781 options
granted and a contract start date of 1 January 2025. The exercise price was
£8.47, a 10.0% discount to the closing mid-market price on the date of
invitation.
Options were valued using the Black-Scholes option pricing model and the
share-based payment charge for the period in respect of the options issued
under the SAYE schemes amounted to £0.7m (31 December 2023: £0.8m), which
has been charged to administrative expenses.
8. Tax expense
The tax charge for the six months ended 31 December 2024 is recognised based
on management's estimate of the weighted average annual effective tax rate
expected for the full financial year, adjusted for the tax impact of any
discrete items arising in the period. The estimated average annual tax rate
used for the six months ended 31 December 2024 is 32.3% (31 December 2023:
31.8%).
The reported effective tax rate for the six months ended 31 December 2024 is
35.1% (31 December 2023: 36.8%). The reported effective tax rate has decreased
from the previous period by 1.6ppts. This is predominantly due to effect of
adjustments in respect of previous years for deferred tax resulting in credit
in the income statement in the six months ended 31 December 2024.
Total tax expense for the six months ended 31 December 2024 of £6.1m (31
December 2023: £8.7m) on continuing operations would represent an effective
tax rate on profit before tax on continuing operations of 35.1% (31 December
2023: 32.5%).
OECD Pillar Two - Global Minimum Tax
The UK substantively enacted the OECD Pillar Two global minimum tax model
rules of the OECD's Inclusive Framework on Base Erosion and Profit Shifting in
June 2023 (the Pillar Two rules). Australia's enactment of the Pillar Two
rules received Royal Assent in December 2023. Both UK and Australia rules will
have effect for accounting periods from 1 January 2024, making it effective
for the Group from 1 July 2024.
Under the Pillar Two rules, a top-up tax arises where the effective tax rate
of the Group's operations in any individual jurisdiction, calculated using
principles set out in Pillar Two legislation, is below a 15% minimum rate. Any
resulting tax would be payable by CVS Group plc to the UK tax authority (HMRC)
being the Group's ultimate parent. The Group is in the process of assessing
its exposure to Pillar Two taxes for the period ended 30 June 2025, but based
on initial assessments does not estimate any current tax expense for Pillar
Two in the period.
The quantitative impact of the Pillar Two rules is not yet reasonably able to
be estimated.
The Group has applied the temporary exception issued by the IASB in May 2023
from the accounting requirements for deferred taxes in IAS 12. Accordingly,
the Group neither recognises nor discloses information about deferred tax
assets and liabilities related to Pillar Two.
9. Intangible, tangible and right-of-use assets
Intangible assets Property, plant and equipment Right-of-use assets
£m £m £m
Six months ended 31 December 2024
Opening net book value at 1 July 2024 334.9 123.0 102.6
Foreign currency translation (6.5) (0.1) (0.3)
Additions 3.2 13.6 1.6
Remeasurement of lease term - - 3.3
Additions arising through business combinations 26.2 1.1 1.1
Fair value adjustments in respect of prior periods (0.2) - -
Disposals - - (0.7)
Amortisation and depreciation (12.7) (11.1) (8.5)
Closing net book value at 31 December 2024 344.9 126.5 99.1
Six months ended 31 December 2023
Opening net book value at 1 July 2023 256.1 101.5 102.9
Foreign currency translation 1.6 - -
Additions 1.5 15.7 2.0
Remeasurement of lease term - - 3.1
Additions arising through business combinations 74.2 1.8 5.8
Disposals - - (0.6)
Amortisation and depreciation (11.7) (7.7) (7.5)
Closing net book value at 31 December 2023 321.7 111.3 105.7
10. Business Combinations
Details of business combinations in the six months ended 31 December 2024 are
set out below. The reason for each acquisition was to expand the CVS Group
business through acquisitions aligned to our strategic goals.
Name of business combination % Share capital acquired Date of acquisition Country of incorporation
Pet Universe Trade and asset 02 July 2024 Australia
Direct Vet Services Trade and asset 02 September 2024 Australia
Northcote Animal Hospital Trade and asset 18 November 2024 Australia
Cessnock Veterinary Hospital, Vetcare Aberglasslyn & Vetcare Kurri Trade and asset 21 November 2024 Australia
Ripley Valley Veterinary Hospital Pty Ltd 100% 21 November 2024 Australia
The table below summarises the total assets acquired through business
combinations in the six months ended 31 December 2024:
Note Book value of
acquired Fair value
assets adjustments Fair value
£m £m £m
Property, plant and equipment 9 1.1 - 1.1
Patient data records 9 - 12.8 12.8
Right-of-use assets 9 1.1 - 1.1
Deferred tax liability 0.1 (3.8) (3.7)
Trade and other receivables 0.1 - 0.1
Trade and other payables (0.5) - (0.5)
Right-of-use liabilities (1.1) - (1.1)
Total identifiable assets 0.8 9.0 9.8
Goodwill 13.4
Total consideration 23.2
Purchase consideration - cash outflow
31 December 2024 31 December 2023 30 June
(Unaudited) (Unaudited) 2024
(Audited)
£m £m
£m
Total Purchase consideration 23.2 65.2 100.9
Less:
Deferred consideration payable (0.3) (2.6) (1.6)
Cash acquired - - (4.1)
Cash outflow for in-year acquisitions 22.9 62.6 95.2
Add:
Deferred consideration paid on prior period acquisitions 0.4 0.5 1.0
Contingent consideration paid on prior period acquisitions - - 0.8
Net outflow of cash- investing activities 23.3 63.1 97.0
The total consideration of £23.2m, net of the cash acquired, is prior to the
agreement of the completion accounts. The amounts recognised are subject to
adjustment in line with IFRS 3 for up to twelve months from acquisition, with
goodwill being adjusted accordingly.
Goodwill recognised represents the excess of purchase consideration over the
fair value of the identifiable net assets. Goodwill reflects the synergies
arising from the combination of the businesses; this includes cost synergies
arising from shared support functions and buying power synergies. Goodwill
includes the recognition of an amount equal to the deferred tax that arises on
non-qualifying fixed assets acquired under a business combination.
Goodwill and intangible assets recognised in the year relating to business
combinations are not expected to be deductible for tax purposes.
Acquired receivables
The fair value of acquired trade receivables is £0.1m. The gross contractual
amount for trade receivables due is £0.1m with a loss allowance of £nil
recognised on acquisition.
Revenue and profit contribution
If the acquisitions made in the period had been owned for the full half period
it is estimated that revenue would have been £5.3m and adjusted EBITDA £1.6m
for the acquired businesses.
Post-acquisition revenue and post-acquisition adjusted EBITDA were £2.3m and
£0.8m respectively. The post-acquisition period is from the date of
acquisition to 31 December 2024. Post-acquisition EBITDA represents the direct
operating result of practices from the date of acquisition to 31 December 2024
prior to the allocation of central overheads, on the basis that it is not
practicable to allocate these.
Acquisition-related costs
Acquisition costs of £1.7m (31 December 2023: £4.5m) are included within
cost relating to business combinations in note 4 of the financial statements.
Contingent consideration, expensed to the income statement, of £5.8m (31
December 2023: £3.0m) are included cost relating to business combinations in
note 4 of the financial statements.
The Directors do not consider any individual in-year acquisition to be
material to the Group and therefore have not separately disclosed these.
Contingent consideration
At the acquisition date of each acquisition contingent consideration of £nil
is recognised. Contingent consideration is expensed to the income statement
for a period of up to three years subject to meeting fixed profitability and
employment targets. If these targets are met, an aggregated £2.4m of
contingent consideration would be payable on the first anniversary of the
acquisitions, an aggregated £2.4m would be payable on the second anniversary
of the acquisitions and an aggregated £1.1m would be payable on the third
anniversary of the acquisitions.
Business combinations in previous years
Details of business combinations in the comparative period are presented in
the consolidated financial statements for the full year ended 30 June 2024
compared to the figures above which are presented for the 6 month period to 31
December 2024. Adjustments to the provisional amounts during the measurement
period has result in additional patient data records of £0.1m, a reduction in
goodwill of £0.3m and additional property, plant and equipment of £0.1m.
During the period to 31 December 2024, £0.4m (31 December 2023: £0.5m) was
paid to settle deferred consideration payable from the prior year and no
payments were made to settle contingent consideration payments (31 December
2023: £nil).
11. Trade and other payables
31 December 2024 31 December 2023 30 June
(Unaudited) (Unaudited) 2024
(Audited)
£m £m
£m
Trade payables 41.9 39.7 50.1
Social security and other taxes 22.8 22.7 19.3
Other payables 5.5 4.2 6.1
Deferred income(1) 2.0 2.3 2.3
Accruals 25.3 22.3 24.8
Total 97.5 91.2 102.6
(1) Deferred income relates to the contract liability relating to the Healthy
Pet Club (HPC) contract.
12. Lease liabilities
31 December 2024 31 December 2023 30 June
(Unaudited) (Unaudited) 2024
(Audited)
£m £m
£m
Current 14.0 14.0 13.9
Non-current 89.8 95.7 92.6
Total discounted lease liabilities 103.8 109.7 106.5
Maturity analysis - contractual undiscounted cash flows
Less than one year 18.9 18.5 19.0
Between one and five years 62.2 61.7 63.3
More than five years 43.0 49.5 47.5
Total 124.1 129.7 129.8
13. Cash flow generated from operations
Six months ended 31 December Six months ended 31 December Year ended 30 June
2024 2023 2024
(Audited)
(Unaudited) (Unaudited)
£m
£m £m
Profit for the period 11.3 14.7 6.4
Tax expense 6.1 8.7 11.8
Finance expense 9.0 5.2 13.4
Loss on the sale of discontinued operation - - 14.3
Amortisation of intangible assets 12.7 11.7 24.8
Depreciation of property, plant and equipment 11.1 7.7 17.7
Depreciation and impairment of right-of-use assets 8.5 7.5 16.0
Profit on sale of property, plant and equipment and right-of-use assets (0.4) (0.1) (0.3)
Decrease/(increase) in inventories 1.5 0.4 (3.0)
Decrease/(increase) in trade and other receivables 0.2 (5.5) (17.4)
(Decrease)/increase in trade and other payables (5.2) (4.1) 10.2
(Decrease)/increase in provisions (0.3) 0.1 (0.3)
Share option expense 0.9 1.4 2.4
Exceptional items 1.5 0.1 5.8
Total net cash flow generated from operations 56.9 47.8 101.8
14. Analysis of movement in liabilities from financing activities
At 1 July 2024 Cash flow New leases Liabilities on disposed leases Non-cash movement £m At 31 December 2024
£m £m £m £m £m
Lease liabilities (106.5) 10.0 (6.0) 1.2 (2.5) (103.8)
Bank loans (181.3) (10.0) - - (0.4) (191.7)
Total liabilities from financing activities (287.8) - (6.0) 1.2 (2.9) (295.5)
At 1 July Cash flow New leases £m Liabilities on disposed leases Non-cash movement £m At 31 December 2023
2023 £m £m £m
£m
Lease liabilities (106.9) 10.1 (10.9) 0.6 (2.6) (109.7)
Bank loans (92.2) (65.7) - - (0.7) (158.6)
Total liabilities from financing activities (199.1) (55.6) (10.9) 0.6 (3.3) (268.3)
Non-cash movements on right-of-use lease liabilities mainly comprise interest.
Non-cash movements on borrowings and bank loans mainly include amortisation of
issue costs on bank loans and bank debt acquired.
15. Dividends
The dividends paid in November 2024, representing the final dividend payable
for the year ended 30 June 2024, amounted to £5.7m (8.0 pence per share) (31
December 2023: £5.4m (7.5 pence per share)).
16. Events after the reporting period
Since the period end, the Group has exchanged contracts for a further small
animal veterinary practice acquisition in Australia, with completion expected
in due course. Consideration for this pending acquisition is £5.7m
(Australian $10.9m). This acquisition is aligned with the Group's strategic
goals.
Directors and advisers
Directors D Wilton (Chair)
D Kemp (Non-Executive Director)
R Gray (Non-Executive Director)
J Shaw (Non-Executive Director)
R Fairman (Chief Executive Officer)
R Alfonso (Chief Financial Officer)
P Higgs (Chief Veterinary officer) (Appointed 25 July 2024)
B Jacklin (Deputy CEO) (Resigned 8(th) July 2024)
Company Secretary S Morrison
Company number 06312831
Registered office CVS House
Owen Road
Diss
Norfolk
IP22 4ER
Independent auditor Deloitte LLP
1 Station Square
Cambridge
CB1 2GA
Bankers NatWest Bank Plc
Gentleman's Walk
Norwich
NR2 1NA
HSBC Bank plc
8 Canada Square
London
E14 5HQ
AIB Group (UK) plc
St Helen's
1 Undershaft
London
EC3A 8AB
Barclays Bank plc
1 Churchhill Place
London
E14 5HP
Virgin Money
15(th) Floor
The Leadenhall Building
122 Leadenhall Street
London
EC3V 4AB
JPMorgan Chase Bank
25 Bank Street
Canary Wharf
London
E14 5JP
Lloyds Bank plc
25 Gresham Street
London
EC2V 7HN
Danske Bank UK
75 King William Street
London
EC4N 7DT
Commonwealth Bank of Australia
Commonwealth Bank Place - South
Level 1
11 Harbours Street
Sydney
New South Wales
Australia
Legal advisors DLA Piper UK LLP
Victoria Square House
Victoria Square
Birmingham
B2 4DL
Eversheds Sutherland
115 Colmore Row
Birmingham
B3 3AL
Linklaters LLP
One Silk Street
London
EC2Y 8HQ
Nominated advisor and broker Peel Hunt LLP
7(th) Floor
100 Liverpool Street
London
EC2M 2AT
Joint broker Berenberg
60 Threadneedle Street
London
EC2R 8HP
Financial Public Relations Camarco
40 Strand
London
WC2N 5RW
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