Morning, everyone, and welcome to CVS Group's analyst presentation, following the release of our financial results early this morning. I'm Richard Fairman, and I'm joined by Robin Alfonso, our CFO, and Paul Higgs, our Chief Veterinary Officer. The results we've released this morning show continued progress against our five-year strategic plan, despite some headwinds in the financial year with our cyber incident in the final quarter, our resulting decision to migrate to a new practice management system, and the CMA investigation being announced in May. We entered the Australia veterinary market in July 2023, and we've successfully established a platform with twenty-two acquisitions in the financial year, comprising twenty-two, twenty-eight sites. We also made five acquisitions in the UK. We've made two further acquisitions in Australia in the new financial year to date, and we spent GBP 95.2 million on those acquisitions in the financial year. We've also taken steps to position the business for future growth, with investment of GBP 43.1 million in capital expenditure, comprising investment in technology, improving our practice facilities, and new clinical equipment, and we also saw an increase in the number of vets employed. We refinanced the business in January, and we've extended our bank facilities, and we have committed undrawn facilities and headroom in our leverage covenant. Revenue for the year increased by 9.9% to GBP 647.3 million, and that was driven by underlying like for like growth of 4.1% and contribution from acquisitions, notably from Australia. Adjusted EBITDA increased by 4.7% to GBP 127.3 million, with EBITDA margin of 19.7%. We also disposed of our loss-making Netherlands and Ireland business in the year, and all of the results reported this morning and the comparatives for the previous financial year are for continuing operations. Our strategy remains unchanged, and despite some short-term headwinds, the market fundamentals remain strong, and CVS is well positioned for future growth. So I'd now like to invite analyst questions. Given this session is being live streamed and recorded, when you ask your question, it'd be helpful if you can just state your name and firm, please. So thank you. Charles? Charles Hall from Peel Hunt. Richard, could you just talk about the staff numbers in the UK? How much the number of vets has changed, and also talk about recruitment and retention in the UK, specifically post the CMA inquiry being announced? Yeah. So we've seen around a 5% increase in the number of vets employed, and that's from recruitment. We've just recruited another 170 graduate vets, but also our retention continues to improve as well. So, we're pleased with the momentum from, you know, the recruitment and the focus on people, and as you know, Charles, we've taken a number of steps in the past few years to reposition CVS as an employer of choice, and that includes improved benefits and rewards. Paul may touch on some of the training enhancements we've made. And we want our colleagues to have long-term, fulfilling careers, whether as clinicians, as similar support or in leadership roles across the business. As a larger group, we have the opportunity to provide that long-term career progression. I guess with our entry into Australia as well, we now have an opportunity to provide secondments for UK colleagues to work in Australia and also some of our Australia colleagues to come and work in the UK. I think that move into Australia is also helpful. Can you also talk a little bit about the spend on R&D, and any particular projects that you want to highlight? Yeah. I mean, Robin and Paul can touch on maybe the kind of clinical research that we do and maybe the R&D credits. So maybe, Paul, if you start on the clinical projects. Yeah, absolutely. So we have a number of quality improvement projects across the estate. Within our small animal, companion animal division, we have nine projects that they can choose from. In fact, many of them will do more than one of those projects, and they are provided with the support tools that are required to be able to learn and improve. So it's partly about education, it's partly about improving the quality of care that they deliver, and those have been received really positively. This will be the third year that we've been running those projects. They change across each year. And in addition to that, we support a number of external projects from university projects, which we contribute to with either data or clinical work at the same time. So we support a couple of PhDs, one of which is at the University of Bristol, focusing on, for example, ectoparasites and environmental impact. I think, in addition to the projects, a lot of our clinicians will write research papers that get published through the ordinary course of work. In terms of the R&D recognition, we recognize GBP 12.8 million R&D this year. That's up from GBP 9.6 million in the prior year. We recognize claims... We submit a claim, we work with a third party to support us with drafting an R&D claim, which is submitted to HMRC, and then we recognize the full claim when it's paid and when the inquiry window is shut. So some complex rules around how we account for R&D. I suppose our annualized R&D claim is around GBP 12 million, and it will continue at that GBP 12 million level going forward. Great, and lastly for me, on Australia, obviously great progress in the year. Can you talk a little bit about the management structure you're now putting in place to be able to manage a larger organization? And where you are on starting to get some of the synergy benefits from a larger group? Yeah, so on structure and organizational structure, we have an experienced operations director from the UK. His name is Graeme Cram. He initially went on secondment to Australia to run our fledgling business. Graham's decided to remain in Australia for the next couple of years, so we have an Australian MD appointed in place, and Graham has significant experience. We're now building a management team in Australia. We have a new legal resource in place. We have a very experienced acquisitions director who's very important in terms of our pipeline, and that pipeline continues to grow. And we have finance, HR resource in country, as well as operational support. And that in-country presence will continue to grow. Robin, Paul, and I will continue to spend time in Australia, but importantly, we do have a management team in place. In terms of synergies, the most obvious initial synergy is drug purchasing, and we've with the practices we acquire have decided to concentrate our spend with one major wholesaler, and that should start to deliver some synergies. Paul and I were with the clinical leaders in Australia in July, and we collectively agreed preferred laboratory providers for both desktop analyzers and reference labs, and also preferred crematoria providers. So we don't necessarily need to operate labs and crematoria in country to start to get synergies. None of those synergies are assumed in the business case, so they should be upside to performance this year. Yeah. Thanks, Charles. Seb? Hi, morning, Seb Jantet with Panmure Gordon. So I'll start off just with UK like-for-likes and just trying to get into those a little bit more. I guess just wondering if you could help us give a sense for kind of volume versus price in those like-for-likes this year. And then just a sense of kind of where you are year to date. 'Cause if I look at the kind of first half, you're at 6%, you're at 4% for the year once we adjust. So that clearly implies closer to 2% in the second half. Are you currently running at that level? Above, below that level? Yeah, I mean, Robin, do you want to pick up the like-for-like growth? Yeah. I think when we talk about like-for-like growth, it's impacted by three things last year. One was the cyber event itself, and that was a short, sharp impact on like-for-like revenue growth, and then the decision to move to Provet Cloud, a new practice management system that comes with some disruption. We moved from a practice management system that our clinicians were used to working with for 10 years plus, and there are new ways of working. It comes with lots of potential downstream benefits, but we're just going through a period where that's bedding down, so that disruption has lessened, but has continued into the first two months, but there are some long-term benefits of that practice management system that will come. I think the second factor has been around the cost of living crisis and the economic environment that has continued. And the third factor is around the COVID puppy and kitten boom, which are probably in their healthy young adult stage right now, which requires less veterinary intervention. That's a short-term headwind, but as those puppies and kittens age, that's a kind of a medium to long-term tailwind. So we'll see more veterinary intervention as they age. We've not shared our like-for-likes for the first two months, but what we have said is trading continues to be challenging. Price versus volume? We've not shared that either. Okay. And so we would take challenging as being worse than the second half run rate or better than the second half run rate? I'm just trying to get some sense of direction of travel here. I don't. We haven't kind of commented on the first two months, and obviously, two months don't make a year. But I guess the important thing, Seb, is that we're very confident with the full year consensus, and that we'll continue to see growth year-on-year. Okay, second one then is so if we assume that like-for-likes don't improve, you know, I guess I'm trying to make sure I've understood that your EBITDA guidance assumes some improvement in the second half in like-for-likes. Is that right? Not necessarily, but we're confident with the forecast. We have confidence in the underlying performance of the UK business and obviously continued growth in Australia with acquisitions made last year, annualizing and improving our performance and also further acquisitions to come this year. So I guess maybe if I ask the question the other way, what if things don't pan out quite as you hope they will in terms of like-for-like, what levers can you pull to protect that EBITDA number? So we have a very prudent balance sheet. We've recognized research and development expenditure credits, but we have unrecognized claims on the balance sheet as well, which you know, potentially could provide upside. And with any business, I guess, in the current climate, there are other levers one can pull, including cost savings and focus on our operations. So there are levers, Seb, that we can pull if necessary. It's worth noting, the one big cost saving that I'm envisaging year-on-year will be utility costs. We saw a big increase in utility costs last year. That had a downward pressure on EBITDA margin, and we're seeing the cost of gas and electricity come down. We run 500 sites across the UK. We run crematoria. We do use a lot of gas and electricity, and therefore, the reduction in those costs, we'll see some cost benefit coming through. Okay, then last question from me then, just going off to Australia. I appreciate they're not in the like-for-likes, but I was wondering if you can give us some sense of the actual pace of travel in those kind of, in those, practices. You know, are they running ahead of the UK, you know, behind the UK? And just, on the CMA, obviously, there's an equivalence to, to the CMA in Australia. I'm wondering to what extent you've had conversations with them, whether when you go into those practices that you're buying, you see some of the things that the CMA has been looking at over here. So just to get a sense of what the risk might be over there for that. Yeah, so the practices we are targeting in Australia are small animal and larger practices with larger management teams and great local reputation. So in terms of the performance of those practices, we expect that performance to be strong. Well, sorry, the vendors who sell the practices to us typically are engaged financially because they have deferred consideration, or in a couple of cases, they still have a small minority interest in the practice. So we're confident the performance with the financial performance to date, and we're confident that will continue. In terms of the CMA equivalent, the ACCC is the equivalent of the CMA in Australia. We have engaged with the ACCC. We are conscious, obviously, of the CMA challenges in the UK, and clearly, we don't want to create a similar problem in Australia. So we are mindful of that, and we will be cautious, and clearly we'll take legal advice as appropriate. But Australia, we clearly have a very small presence at the moment and therefore no conceivable issues currently. But as we continue to grow, clearly, we need to be mindful of competition concerns. In terms of some context, the UK is 6% consolidated. Australia is 15% consolidation, so very low levels of consolidation from a market perspective. Thanks, Seb. Andrew? Hi. Thanks. It's Andrew from Investec. Just can I follow up on Seb's question on like-for-like? I think you had about GBP 25 million or GBP 26 million worth of acquired revenue in the financial year. I assume some of that stays non-like for like revenue next year, i.e., should we be expecting the same rough order of magnitude of that? I'm just trying to impute what the numbers I see in consensus mean. People are thinking about like-for-like growth rate. Is that the right way to think? Yeah, so, our like-for-like measure adjusts. It It doesn't include current year acquisitions, and it only includes prior acquisitions from the same year. Same point in the year. Same point in the year. Yeah. So if I think about it, we'll have some annualization of acquisitions into next year, and then separately, we'll have the like-for-like growth on the rest. Whatever acquisitions. Yeah You do in the year. In the year. Yeah. Yeah. Okay, that's really helpful, and I guess people may not have updated for the divestment of Europe in terms of the hit on revenue, and that's what will happen through the numbers, I guess. Yep. Yeah. Okay, that's really helpful. Thank you. And then just on the CMA, just timing of news flow, if you've got any view on the timing of when we can hear different bits and then what that might mean, that'd be really helpful. Thanks. Yeah, so the CMA actually announced a brief update yesterday morning where they reaffirmed their timetable. There's a slight slippage to their provisional decision, which we now expect in May or June next year, rather than April or May, so a slight delay there. But the statutory deadline remains the twenty-second of November next year. And you recall that the CMA first launched their initial market review on the seventh of September last year. So we're roughly halfway through their process, or albeit, clearly a long way still to go. We expect from probably November onwards this year, as is typical with any market investigation, the CMA will start to release what they call working papers. We understand they will start to discuss some of the kind of areas of concern they may have, and also potentially some of the remedies they might consider. The provisional decision next May or June will highlight the concerns they have, if any, and also any possible remedies. There might be a broad range of remedies that they announce. In the final stage of their investigation, pending their final decision, we understand the CMA then focus on those remedies that they really feel are appropriate for the sector. Now, Paul and I and Robin have spent time trying to help educate the CMA panel. Maybe you can touch on the teach-in session and also the site visits that we've had. Yeah, so, we have had one teach-in where we would explain the background to the profession and the ways of working, and in addition to that, we brought the CMA with us to see two of our practices over in Swansea, one referral practice and one first opinion practice, to give them some insight into those ways of working, the quality of care that can be delivered in great quality practices, and to really be able to demonstrate why, when we talk to owners about individualized care, what that can look like, and the variety of different care models that are appropriate to animals under our care. Very helpful. Thanks. Thanks, Andrew. Okay. Sat on the wrong side of the room. You stole my questions. Let me just think. Just on the sort of CMA, I mean, what you kind of cited as sort of one of the reasons for the, you know, the growth story, you know, cyber plus CMA impacts cloud. What, what does it really mean? Are you actually seeing people sort of be hesitant to come visit your your clinics? Presumably, you don't have branding at the, for site level, so they wouldn't know it's CVS anyway. But just wondering, what does that comment really mean? Yeah, and, or actually, on the latter point, we, our practices do have a local brand but we'd like to think all of our clients know their practice is owned by CVS. There's a number of ways we remind our clients that their practice is part of our group. I guess the comment about the CMA scrutiny of the sector is that obviously with any CMA announcement, we've seen press articles talking about the concerns the CMA are raising and talking about the cost of veterinary care. Robin mentioned the economic climate and consumer confidence, and this kind of rhetoric that vets are expensive is unhelpful. Clearly, we believe that they're not, and actually vets provide a fantastic service to our clients, so but it's that kind of overhang and that rhetoric that's unhelpful. And the short term, sort of. You kind of allude to short-term headwinds. What is short term? Is that six months? Is that the year? Just, I guess it's a follow-on from Seb, sort of nudging on the like for likes, but just what does short term really mean here in terms of the headwinds? Yeah, I mean, the economic climate, I guess, is still challenging. Yeah. We're seeing that across a number of sectors. I guess we're all patiently waiting for the Chancellor's Autumn Statement and what that brings. It's kind of hard to answer that question, but clearly, at the moment- Okay Yeah, consumer confidence is probably low, and that's an impact on any consumer-facing business. Although it's worth noting, you know, we do see opportunities to improve the client experience, and part of the investment in the practice management system allows us to improve that experience for the client, whether it's personalized communication, whether it's online booking, whether reminders, repeat prescriptions. So for us, there are actions separate from the wider market that we're taking to see if we can improve the client experience and therefore footfall and also revenue. Yeah, I realize there's some puts and takes with the full year number. How much of that accelerated cloud spend kind of hits the P&L, like, that we wouldn't have otherwise had for this year now? So most. Done a lot of it, I mean. Yeah, most of the capital investment is landed. Yeah. It is a SaaS-based system, so it comes with ongoing operating costs. Okay. Yeah That will hit our P&L, but and we're confident that will drive further revenue to compensate. Okay. All right. Sorry, and just finally, on divestments. I think, when was it? CMD, you kind of had this sort of chart of distribution of practices. Yeah. You've obviously got rid of Netherlands, Republic of Ireland. I'm just wondering, in the broader U.K. piece, is there anything in there that you think sort of doesn't stack up anymore, given we're like two years- Yeah, I mean, we're. Gone now? We're improving, we're investing to improve our practices, and we shared at the Capital Markets Day, the cohort of our practices and the bell curve distribution of performance. So we still have, I guess, an opportunity to improve some of our poor, poorer quality sites, and we are committed to that. We've committed to GBP 30 million- GBP 50 million of capital expenditure each year. So that remains part of our commitment. But in terms of are we happy with our practices? Absolutely. Thank you. Yeah, thank you. Thanks. Hi, Charles Weston from RBC. Three questions, please. First of all, there was a new stat, I think, in the press release. In the presentation around the return on capital from acquisitions, and I think it says it averages 10% in the first five years from acquisition and exits circa 20%. So given the multiples are relatively low, and I would have thought would have started to deliver return on capital pretty close to 10% right from the start, can you just sort of explain how you get to that 10%, or what the expectations are associated with that, and perhaps what the shape looks like of that 10%-20% move? Yeah. So that return on investment capital is. It says it's based on EBIT. So actually, there are some amortization costs to patient data records in the early years that impacts the return metric. Although the multiples are lower, we have said that in Australia, corporation tax rates are higher, at 30% than in the UK, which is at 25%. So some of the kind of multiple benefit is slightly offset by the increased tax from a return on investment capital. You don't need. What we've not modeled is any synergies on top of that. So if there were further synergies to be delivered, then actually those return on investment numbers would be improved further. So the synergies you've just been talking about being delivered now aren't actually included in that? No. Okay. And then, in terms of those multiples, can you just give us a reminder, perhaps, of the sort of multiple difference between the UK and the US, and Australia? You've said Australia is lower, one point, two points. Maybe two or three points. I mean, we've talked about UK acquisitions at around 10x multiple. The multiples in Australia will vary, but they are lower. Okay, and sorry, so just lastly then, the shape to the exit of 20%, is that partly because perhaps three or four years of amortization drops away and you see a step-up in the last year or two, or is it a bit smoother than that? Yes, a bit smoother. We amortize over ten years, so some of it will be just incremental growth and some of it will be the cash generation from the investment itself. Okay, thank you and then, perhaps how that pertains to your margin target for the group of 23%. You know, there's maturing acquisitions, there's maturing things like Bristol, and greenfield sites, and there's that bell curve and the investments that you've got there. Are they the sort of main drivers to be able to get from here to 23%? Is that still in sight? Yeah, they are some of the drivers. I think the Australia practices, because they're larger, and because we're targeting those better sites, they should be margin accretive as well to the group. So the more activity we do in Australia, that should also help. Okay, thank you. And, my last one, please, just a clarification on Seb and Andrew's question. In terms of the expectations that you're trading in line with consensus expectations for this year- Yeah Can you just confirm that that doesn't include any further acquisitions that you're going to make? Yeah, so we've got acquisitions so far that will annualize up and support, obviously, our full year numbers. But not any further acquisitions that will be additive? Yeah, I mean, further acquisitions, we're confident of making, and they should be additive. Okay. Thank you. Morning, all. James Baylis from Berenberg here. Just thinking about like for likes and the increase in pet ownership over the pandemic, and the different levels of care animals require over their lives. I think you refer in the statement to them sort of being in the healthy, young adult stage from when they were kind of puppies and kittens in the pandemic. Perhaps it's a hard one to answer, but how should we be thinking about that in terms of the impact on like for like performance at this point in that cycle, if you like? Paul, do you wanna talk through the typical profile, I guess, of what we see? And we're obviously talking about averages when we're talking about those factors, and then maybe Robin can just touch on the like for like impact. All right, maybe I'll go first, okay. I mean, clearly, when they're puppies and kittens, there's a lot of spend. A lot of it is ancillaries, like retail spend, but you do have chipping. You do have your neutering, your spays, which are our most discounted procedures, actually. So think about an average bitch spay, which is under general anesthetic. It's monitored by a nurse, probably GBP 200-GBP 300 for a small animal. But in later life, if you find a lump, you have to remove a lump. It's a similar abdominal surgery, similar general anesthetic, similar monitoring by a nurse, and you have your vet doing the surgery. It's more like GBP 1,000 plus. So the most discounted procedures. And then after that, pups and kittens tend to be healthy from three to five, depends on the size, the age of the dog and the breed. Sometimes they get less healthy more quickly, and sometimes they stay healthy for a lot longer. And then you're into kind of weight, you know, walking. If you're walking around more, there are some accidents, or there are some lumps and bumps. And then as they get older, you have your more kind of geriatric diseases that come through, and that does require more intervention. So I think it. That's the kind of profile. That's a good clinical summary, actually. Yeah. I was sweating. Very much. And I think in there, you know, you've got this. You've got the hereditary or the silly puppy incidents that happen that also we see that little bit of a peak in puppy years. But as we say, there is the healthy adult years, where we really do see the interaction with us is much more about kind of health and lifestyle rather than illness and injury is much less in that period. And then as they get older, we start to see a peak in the illness coming through, and many of those are chronic interventions, so when that begins, that's something where they'll be engaging with us for an extended period of time, potentially for the rest of their lives as well. Perfect, thanks. Then one final question for me. Just on Australia, and picking up on some of Richard's comments around this kind of the quality of the operations you're acquiring out there. In the context of that GBP 30 million- GBP 50 million of group capital expenditure you're aiming for a year, should we still be thinking about that being predominantly the U.K., or is there any opportunity to drive innovation and kind of upscaling or scaling in Australia? Yeah, I mean, there might be some opportunity to invest in, say, better clinical equipment in some of those practices in Australia, but the predominant amount of that investment will be in the UK. Fine, thanks. Thanks, James. Any final questions? Okay, well, thank you all for joining. I know this session is being watched by a number of our investors, so I really appreciate your continued support, and I guess all of the numbers we've announced today and all of our future prospects rely on our continued dedication of our colleagues, whose passion and commitment for providing the best possible care to our clients and their pets continues, and I really appreciate their support. Thank you. Thank you, all. James. Any final questions? Okay, well, thank you all for joining. I know this session is being watched by a number of our investors, so I really appreciate your continued support, and I guess all of the numbers we've announced today and all of our future prospects rely on our continued dedication of our colleagues, whose passion and commitment for providing the best possible care to our clients and their pets continues, and I really appreciate their support. Thank you. Thank you, all. James. Any final questions? Okay, well, thank you all for joining. I know this session is being watched by a number of our investors, so I really appreciate your continued support, and I guess all of the numbers we've announced today and all of our future prospects rely on our continued dedication of our colleagues, whose passion and commitment for providing the best possible care to our clients and their pets continues, and I really appreciate their support. Thank you. Thank you, all. James. Any final questions? Okay, well, thank you all for joining. I know this session is being watched by a number of our investors, so I really appreciate your continued support, and I guess all of the numbers we've announced today and all of our future prospects rely on our continued dedication of our colleagues, whose passion and commitment for providing the best possible care to our clients and their pets continues, and I really appreciate their support. Thank you. Thank you, all. James. Any final questions? Okay, well, thank you all for joining. I know this session is being watched by a number of our investors, so I really appreciate your continued support, and I guess all of the numbers we've announced today and all of our future prospects rely on our continued dedication of our colleagues, whose passion and commitment for providing the best possible care to our clients and their pets continues, and I really appreciate their support. Thank you. Thank you, all. James. Any final questions? Okay, well, thank you all for joining. I know this session is being watched by a number of our investors, so I really appreciate your continued support, and I guess all of the numbers we've announced today and all of our future prospects rely on our continued dedication of our colleagues, whose passion and commitment for providing the best possible care to our clients and their pets continues, and I really appreciate their support. Thank you. Thank you, all.