Q4 2026 CVS Group PLC Earnings Call

October 1, 2026

Speaker #1: Welcome to this presentation of CVS Group's full-year results for the year ended 30th June 2026. I'm Richard Ferman, CEO, and you will also be hearing from Robin Alfonso, our CFO, and Paul Higgs, our Chief Veterinary Officer.

Richard Fairman: Welcome to this presentation of CVS Group's full year results for the year ended 30 June 2026. I'm Richard Fairman, CEO, and you will also be hearing from Robin Alfonso, our CFO, and Paul Higgs, our Chief Veterinary Officer. The results we've announced today demonstrate another year of growth and strategic progress. While UK companion animal footfall remains softer than we would like during parts of the year, we have a number of initiatives underway to support volume growth and client engagement across all three divisions. We continue to invest in technology, facilities, and clinical equipment to support organic growth. Although, as outlined in our July investor presentation, we expect our capital investment going forwards to be lower than in recent years. We've successfully refinanced our bank facilities in May, extending them through to 30 May 2030 on improved terms, and we have a one-year extension at our discretion.

Speaker #1: The results we have announced today demonstrate another year of growth and strategic progress. While UK companion animal footfall remains softer than we would like during parts of the year, we have a number of initiatives underway to support volume growth and client engagement across all three divisions.

Speaker #1: We continue to invest in technology, facilities, and clinical equipment to support organic growth. However, as outlined in our July investor presentation, we expect our capital investment going forward to be lower than in recent years.

Speaker #1: We've successfully refinanced our bank facilities in May, extending them through to May 30, 2030, on improved terms, and we have a one-year extension at our discretion.

Speaker #1: We will continue to focus on capital allocation and look to deploy capital to drive the highest returns. What is considered the most optimum use of capital is clearly linked to our prevailing share price.

Richard Fairman: We will continue to focus on capital allocation and look to deploy capital to drive the highest returns. What is considered the most optimum use of capital is clearly linked to our prevailing share price. With refinancing in place and our continued subdued share price, we announced a GBP 50 million share buyback in May, which we expect to conclude in the next couple of months. This is following a GBP 20 million share buyback in support of our step up to the main market, which completed in January. After five years of CMA activity in the sector across their initial mergers and subsequent markets work, it is great that the CMA process has now concluded following the publication of their remedies order and fees order on Tuesday. We are broadly comfortable with the remedies and are well advanced in our implementation of them.

Speaker #1: With refinancing in place and our continued subdued share price, we announced a £50 million share buyback in May, which we expect to conclude in the next couple of months.

Speaker #1: This is following a £20 million share buyback in support of our step-up to the main market, which completed in January. After five years of CMA activity in the sector, across their initial mergers and subsequent markets work, it is great that the CMA process has now concluded.

Speaker #1: Following the publication of their remedies order and fees order on Tuesday, we are broadly comfortable with the remedies and are well advanced in our implementation of them.

Speaker #1: Revenue increased by 5.9% to £712.8 million, with growth across all three divisions. Like-for-like revenue growth improved to 2.1%, reflecting positive momentum across the business—despite softer demand in the final quarter, as a result of continued weakness in UK consumer confidence and the exceptionally hot spells of weather at the end of May and again at the end of June.

Richard Fairman: Revenue increased by 5.9% to GBP 712.8 million, with growth across all three divisions. Like-for-like revenue growth improved to 2.1%, reflecting positive momentum across the business, despite softer demand in the final quarter as a result of continued weakness in UK consumer confidence and the exceptionally hot spells of weather at the end of May and again at the end of June. We saw clients less willing to travel in their cars with their pets in these periods, and a number of routine appointments were deferred and some procedures were canceled. We continued to see an impact of this in July, but encouragingly, more recent trading has returned to pre-May levels before the impact of these heatwaves. Adjusted EBITDA increased by 5.1% to GBP 141.5 million, with margins being maintained notwithstanding continued inflationary pressures in the financial year.

Speaker #1: We saw clients less willing to travel in their cars with their pets during these periods, and a number of routine appointments were deferred, and some procedures were canceled.

Speaker #1: We continue to see an impact from this in July, but encouragingly, more recent trading has returned to pre-May levels, before the impact of these heat waves.

Speaker #1: Adjusted EBITDA increased by 5.1% to £141.5 million, with margins being maintained notwithstanding continued inflationary pressures in the financial year. Adjusted earnings per share increased by 6.9% to £85.6, benefiting from both an increase in the adjusted profit before tax and, to a lesser extent, a reduction in the weighted average number of shares due to the shares that were cancelled following our share buybacks.

Richard Fairman: Adjusted earnings per share increased by 6.9% to 85.6 pence, benefiting from both an increase in the adjusted profit before tax and, to a lesser extent, reduction in the weighted average number of shares due to the shares which were canceled following our share buybacks. We further increased our presence in Australia with six acquisitions completed in the financial year, comprising 14 sites for initial consideration of GBP 43.3 million. We will continue to be selective in our acquisition approach. Leverage increased at the year-end to 1.63 times, reflecting these acquisitions and the share buyback programs. We continued our focus on client care, and it was pleasing to see our client net promoter score increase further to 80.6, and also pleasing to see an improvement in our employee net promoter score.

Speaker #1: We further increased our presence in Australia with six acquisitions completed in the financial year, comprising 14 sites for initial consideration of 43.3 million sterling.

Speaker #1: We will continue to be selective in our acquisition approach. Leverage increased at the year end to 1.63 times, reflecting these acquisitions and the share buyback programs.

Speaker #1: We continued our focus on client care and it was pleasing to see our client net promoter score increase further to 80.6, and also pleasing to see an improvement in our employee net promoter score.

Speaker #1: I am confident in our ability to deliver further growth in shareholder value, given the attractive fundamentals of the sector in which we operate and our own positioning within it.

Richard Fairman: I am confident in our ability to deliver further growth in shareholder value given the attractive fundamentals of the sector in which we operate and our own positioning within it. The UK and Australia veterinary markets remain highly attractive and despite recent short-term pressures, continue to benefit from strong long-term growth drivers. We have scale in the UK and increasing scale in Australia with enhanced synergies expected to follow over time. We have a healthy balance sheet and with our continued focus on cash generation and following the successful refinancing in the year, we have capital to deploy. I am very confident in our ability to undertake accretive acquisitions in Australia and the UK, but as always, we will continue to be selective and we will only be willing to pay multiples which are attractive with respect to our own multiple. We continue to focus on delivering great client service.

Speaker #1: The UK and Australia veterinary markets remain highly attractive, and despite recent short-term pressures, continue to benefit from strong long-term growth drivers. We have scale in the UK and increasing scale in Australia, with enhanced synergies expected to follow over time.

Speaker #1: We have a healthy balance sheet, and with our continued focus on cash generation and following the successful refinancing in the year, we have capital to deploy.

Speaker #1: I am very confident in our ability to undertake creative acquisitions in Australia and the UK, but as always, we will continue to be selective, and we will only be willing to pay multiples which are attractive with respect to our own multiple.

Speaker #1: We continue to focus on delivering great client service. We have strengthened our technology in support, and we have an experienced leadership team. There are a number of compelling market dynamics which make the veterinary sector attractive and support long-term growth.

Richard Fairman: We have strength in our technology, in support, and we have an experienced leadership team. There are a number of compelling market dynamics which make the veterinary sector attractive and which support long-term growth. The continued humanization of pets sees owners treating them as an integral part of their family. Clients expect the same level of medical support and care for their animals as they themselves enjoy, and they will go the extra mile to care for them and keep them healthy. As a result, owners want to look after their animals and are willing to spend on keeping them fit and healthy. The pet populations in the UK and Australia have increased post-COVID, and whilst the populations were higher at the peak of COVID lockdowns, the pet population in both countries remains higher than it was prior to the pandemic.

Speaker #1: The continued humanization of pets sees owners treating them as an integral part of their family. Clients expect the same level of medical support and care for their animals as they themselves enjoy, and they will go the extra mile to care for them and keep them healthy.

Speaker #1: As a result, owners want to look after their animals and are willing to spend on keeping them fit and healthy. The pet population in the UK and Australia has increased post-COVID, and while the population was higher at the peak of COVID lockdowns, the pet population in both countries remains higher than it was prior to the pandemic.

Speaker #1: And as those COVID pets age, we will naturally see increased demand for our services. Pets are also living longer, and hence, not only is the current pet population larger, but the pets under our care will require our veterinary services for a longer period of time.

Richard Fairman: As those COVID pets age, we will naturally see increased demand for our services. Pets are also living longer, and hence, not only is the current pet population larger, the pets under our care will require our veterinary services for a longer period of time. Advances in clinical care are a further key driver. We are now able to provide better clinical care to animals than we could even 20 years ago. The veterinary sector has also proven to have a high degree of resilience through economic cycles. Given the humanization of pets, when animals get ill or injured, clients invariably bring them in for treatment, and surveys of pet owners consistently reveal that they are willing to spend to look after their pets. These secular dynamics underpin our outlook for long-term market growth.

Speaker #1: Advances in clinical care are a further key driver. We are now able to provide better clinical care to animals than we could even 20 years ago.

Speaker #1: The veterinary sector has also proven to have a high degree of resilience through economic cycles. Given the humanization of pets, when animals get ill or injured, clients invariably bring them in for treatment.

Speaker #1: And surveys of pet owners consistently reveal that they are willing to spend to look after their pets. These secular dynamics underpin our outlook for long-term market growth.

Speaker #1: Both the UK and Australia markets in which we operate are large, with significant opportunity for further expansion. CVS is aiming to grow market share in each market, and we are confident in our ability to make further accretive acquisitions.

Richard Fairman: Both the UK and Australia markets in which we operate are large with significant opportunity for further expansion. CVS has scope to grow market share in each market, and we are confident in our ability to make further accretive acquisitions. We entered Australia three years ago in July 2023, and we have seen steady growth in the period since such that Australia, excluding central overheads, now accounts for circa GBP 20 million of group EBITDA. We continue to see a great opportunity to acquire practices that are accretive to the group. We are also focused on driving organic growth in our two markets through a combination of continuing to recruit, retain, and develop our teams so that they can provide great care to our clients and their animals. Further developing our product offering.

Speaker #1: We entered Australia three years ago, in July 2023, and we have seen steady growth in the period since. Australia, excluding central overheads, now accounts for approximately £20 million of Group EBITDA.

Speaker #1: We continue to see a great opportunity to acquire practices that are accretive to the group. We are also focused on driving organic growth in our team markets through a combination of continuing to recruit, retain, and develop our teams so that they can provide great care to our clients and their animals.

Speaker #1: Further developing our product offering—for example, we launched Healthy Pet Club Advanced on July 1st of this year—which provides the same great preventative health benefits as our core product, but also gives clients unlimited consultations for an additional monthly fee.

Richard Fairman: For example, we launched Healthy Pet Club Advanced on 1 July this year, which provides the same great preventative health benefits as our core product, but also gives clients unlimited consultations for an additional monthly fee. Continuing to improve the client experience and make it easier for clients to engage with us through improved technology and driving increased client engagement and footfall through targeted marketing and CRM activity and maximizing the benefit of our new joint CVS Vets branding. Paul will elaborate on these later, but for now, I will hand over to Robin to provide a more detailed financial update.

Speaker #1: Continuing to improve the client experience and making it easier for clients to engage with us through improved technology; driving increased client engagement and footfall through targeted marketing and CRM activity; and maximizing the benefit of our new joint CVS Vets branding.

Speaker #1: Paul will elaborate on these later, but for now, I will hand over to Robin to provide a more detailed financial update.

Speaker #2: Thanks, Richard. I'm pleased to report on a further year of growth in revenue, adjusted EBITDA, and adjusted earnings per share, alongside further expansion in Australia.

Robin Alfonso: Thanks, Richard. I am pleased to report on a further year of growth in revenue, adjusted EBITDA, and adjusted earnings per share alongside further expansion in Australia. Revenue increased by 5.9% to GBP 712.8 million, benefiting from acquisitions made during the current and prior year and an improvement in the year in like-for-like sales with growth of 2.1%. Our like-for-like sales growth is adjusted for working days and on a constant currency basis. It excludes current year acquisitions and only includes prior year acquisitions from the same month this year as they were acquired in the previous year. As Richard noted earlier, despite softer market conditions due to the impact of extreme weather in the final quarter, like-for-like sales growth remained positive and improved year-on-year.

Speaker #2: Revenue increased by 5.9% to £712.8 million, benefiting from acquisitions made during the current and prior year, and an improvement in the year in light of sales growth of 2.1%.

Speaker #2: Our like-for-like sales growth is adjusted for working days and calculated on a constant currency basis. It excludes current year acquisitions and only includes prior year acquisitions from the same month this year, as they were acquired in the previous year.

Speaker #2: As Richard noted earlier, despite softer market conditions due to the impact of extreme weather in the final quarter, light flight sales growth remained positive and improved year-on-year.

Speaker #2: Adjusted EBITDA increased by 5.1% to £141.5 million, benefiting from top-line revenue growth and disciplined cost management, which helped us maintain the adjusted EBITDA margin at 19.9%.

Robin Alfonso: Adjusted EBITDA increased by 5.1% to GBP 141.5 million, benefiting from top-line revenue growth and disciplined cost management, which helped us maintain adjusted EBITDA margin at 19.9%. Despite continued inflationary pressures, for example, from increases in the UK national minimum wage and national living wage and increased employer national insurance contributions. Adjusted earnings per share increased by 6.9% to 85.6 pence, benefiting from increased adjusted profit before tax and to a lesser extent, a reduction in the weighted average number of shares in issue due to our share buyback program, which is ongoing. We continue to focus hard on ensuring we have a healthy balance sheet, and I was delighted to complete a refinancing in the year with committed facilities of GBP 350 million through to May 2030 and continued headroom in the undrawn facilities and financial covenants.

Speaker #2: Despite continued inflationary pressures, for example, from increases in the UK National Minimum Wage and National Living Wage, and increased employer National Insurance contributions, adjusted earnings per share increased by 6.9% to £85.6.

Speaker #2: Benefiting from increased adjusted profit before tax and, to a lesser extent, a reduction in the rated average number of shares in issue due to our share buyback program, which is ongoing.

Speaker #2: We continue to focus hard on ensuring we have a healthy balance sheet, and are delighted to complete a refinancing in the year, with committed facilities of £350 million through to May 2030, and continued headroom in the undrawn facilities and financial covenants.

Speaker #2: We're also able to improve our terms and flexibility through this refinancing, and we have the option of an additional one-year extension to May 2031.

Robin Alfonso: We were also able to improve our terms and flexibility through this refinancing, and we have the option of an additional one-year extension to May 2031. This, together with our continued strong operating cash conversion, which was 70.6% in the financial year, means we have a strong base in which to invest. We will continue to focus on capital allocation, and as we explained in our investor presentation in July, we will focus on the most effective use of capital with a view to our prevailing share price. We continue to invest in Australia with AUD 45.4 million total consideration in the financial year, which includes a small minority interest buyout. We also invested GBP 36.4 million in capital expenditure. This reflects our continued investment in technology, facilities, and clinical equipment, and maintenance CapEx of GBP 11.5 million.

Speaker #2: This, together with our continued strong operating cash conversion—which was 70.6% in the financial year—means we have a strong base on which to invest.

Speaker #2: We will continue to focus on capital allocation, and as we explained in our investor presentation in July, we will focus on the most effective use of capital with a view to our prevailing share price.

Speaker #2: We continue to invest in Australia, with £45.4 million total consideration in the financial year, which includes a small minority interest buyout. We also invested £36.4 million in capital expenditure.

Speaker #2: This reflects our continued investment in technology, facilities, and clinical equipment, and maintenance capex of £11.5 million. Whilst maintenance capex will remain at a similar, if not slightly higher, level for the next few years, I expect our total capital expenditure requirements to reduce, freeing up more capital for other purposes.

Robin Alfonso: Whilst maintenance CapEx will remain at a similar, if not slightly higher level for the next few years, I expect our total capital expenditure requirements to reduce, freeing up more capital for other purposes. The investments made and the share buyback program resulted in an increase in net bank borrowings to GBP 199.6 million at 30 June. Leverage increased to 1.63 times, but remains well within our stated two times threshold. We have generated positive returns from our investments over the past few years with a return on capital employed consistently in excess of 15%. in the past financial year, we saw group ROCE of 16.1%, which was impacted by a combination of like-for-like growth below our 4% to 8% target, increased UK employment costs, and the dilutive early year impact from acquisitions and CapEx.

Speaker #2: The investments made and the share buyback program resulted in an increase in net bank borrowings to £199.6 million at 30 June. Leverage increased to 1.63 times, but remained well within our stated two times threshold.

Speaker #2: We've generated positive returns from our investments over the past few years, with a return on capital employed consistently in excess of 15%. In the past financial year, it was 16.1%, which was impacted by a combination of light flight growth—below our 4% to 8% target—increased UK employment costs, and the dilutive early-year impact from acquisitions and capex.

Speaker #2: In our July investor presentation, I shared further detail on the returns we've made from investments in recent years, which are in excess of our weighted average cost of capital.

Robin Alfonso: In our July investor presentation, I shared further detail on the returns we have made from investments in recent years, which are in excess of our weighted average cost of capital. Typical CapEx investment generates an IRR of 15%, pays back within seven years, and delivers a ROCE within three to five years of up to 15%. Similarly, for acquisitions, we see good returns with ROCE approaching 19%. Revenue increased across all three of our divisions, and I will share further details on the divisional split shortly. It was pleasing to see further growth in Australia, which continues to perform in line with expectations. It was also pleasing to see the return to like-for-like growth across the group. Our Australia operations generated revenue of AUD 79.1 million in the year, representing just over 11% of group revenue.

Speaker #2: Typical capex investment generates an IRR of 15%, pays back within seven years, and delivers a ROIC within three to five years of up to 15%.

Speaker #2: Similarly, for acquisitions, we see good returns, with Rocky approaching 19%. Revenue increased across all three of our divisions, and I will share further details on the divisional split shortly.

Speaker #2: It was pleasing to see further growth in Australia, which continues to perform in line with expectations. It was also pleasing to see the return to light flight growth across the group.

Speaker #2: Our Australia operations generated revenue of £79.1 million in the year, representing just over 11% of group revenue. It was pleasing to see a further increase in adjusted EBITDA in the past year, notwithstanding the weaker economic backdrop and the continued inflationary pressures which I mentioned earlier.

Robin Alfonso: It was pleasing to see a further increase in adjusted EBITDA in the past year, notwithstanding the weaker economic backdrop and the continued inflationary pressures, which I mentioned earlier. We continue to target cost efficiencies. For example, we retendered our major job contracts in the year, generating improved terms and margins. The improvements we are making in our technology should also support with this. As set out in our annual report, since 2019, revenue has grown at a compound annual rate of 8.4% and EBITDA at 14.6%. Our Veterinary Practices division, which is our largest by far, comprises our companion animal, referrals, farm animal, and equine veterinary practices, as well as our buying groups and Vet Direct. This division delivered 5.2% growth in revenue, benefiting from like-for-like revenue and acquisitions.

Speaker #2: We continue to target cost efficiencies. For example, we re-tendered our major drug contracts in the year, generating improved terms and margins. The improvements we are making in our technology should also support this.

Speaker #2: As set out in our annual report, since 2019, revenue has grown at a compound annual rate of 8.4%, and EBITDA at 14.6%. Our Veterinary Practices division, which is by far our largest, comprises our Companion Animal Referrals, Farm Animal, and Equine veterinary practices, as well as our buying groups and Vet Direct.

Speaker #2: This division delivered 5.2% revenue growth, benefiting from like-for-like revenue and acquisitions. While this division experienced the greatest impact from the economic backdrop and extreme weather conditions, demand for reactive care remained robust and underlying market fundamentals continued to be attractive.

Robin Alfonso: While this division experienced the greatest impact from the economic backdrop and extreme weather conditions, demand for reactive care remained robust and underlying market fundamentals continued to be attractive. Adjusted EBITDA increased by 4.3%. Again, this division is most impacted by higher wage inflation and increased employer National Insurance contributions. Our Laboratories division in the UK comprises two reference laboratories, Axiom and Finn Pathologists, and our desktop analyzer business, which provides analyzers in practice to allow in-house testing, for which we supply the reagents for the tests. Revenue in this division increased by 11.5% to GBP 35 million due to continued strong demand. We have successfully increased the number of third-party practices we support in the year. This division benefits from the continued strong demand we are seeing in practices for reactive care, where animals get ill or injured.

Speaker #2: Adjusted EBITDA increased by 4.3%. Again, this division is most impacted by higher wage inflation and increased employer National Insurance contributions. Our laboratories division in the UK comprises two reference laboratories, Axiom and Finn Pathologists, and our desktop analyser business, which provides analysers in practice to allow in-house testing.

Speaker #2: For which we supply the reagents for the tests. Revenue in this division increased by 11.5% to £35 million due to continued strong demand, and we successfully increased the number of third-party practices we support in the year.

Speaker #2: This division benefits from the continued strong demand we are seeing in practices for reactive care, where animals get ill or injured. Clients invariably wish to spend on getting them better, and clearly, the majority of laboratory testing is undertaken in support of ill or injured animals.

Robin Alfonso: Clients invariably wish to spend on getting them better, and clearly the majority of laboratory testing is undertaken in support of ill or injured animals. Adjusted EBITDA increased by 25.6% in this division, reflecting this revenue growth, combined with good operating leverage. Our online retail business saw revenue growth of 11.1% following the launch of a new website in the previous year, improved client service and functionality through Subscribe & Go, guest checkout, new payment options, and more recently, next day delivery alongside increased marketing spend. It was pleasing to see growth in adjusted EBITDA for the year as a whole. This improvement was entirely in the H2 of the year following the new features being launched.

Speaker #2: Adjusted EBITDA increased by 25.6% in this division, reflecting this revenue growth combined with good operating leverage. Our online retail business saw revenue growth of 11.1%, following the launch of a new website in the previous year, improved client service and functionality through Subscribe and Go, guest checkout, new payment options, and, more recently, next day delivery, alongside increased marketing spend.

Speaker #2: It was pleasing to see growth in adjusted EBITDA for the year as a whole. This improvement was entirely in the second half of the year, following the launch of new features.

Speaker #2: Central administration costs increased in the year due to an increase in the accrual for non-cash share-based payments and are stated net of our recognition of research and development expenditure credits of £15.7 million.

Robin Alfonso: Central administration costs increased in the year due to an increase in the accrual for non-cash share-based payments and are stated net of our recognition of research and development expenditure credits of GBP 15.7 million. I am pleased to report a return to growth in adjusted earnings per share, which increased by 5.5p to 85.6p. This increase reflects the increase in adjusted EBITDA and the normalization in depreciation to circa 6% of revenue following a step up in CapEx in recent years. I expect CapEx to be GBP 30 million per annum. The effective tax rate on adjusted earnings per share was 27.5%, reflecting some disallowable expenditure and the UK rate of 25% and the Australia rate of 30%.

Speaker #2: I'm pleased to report a return to growth in adjusted earnings per share, which increased by 5.5 pence to 85.6 pence. This increase reflects the rise in adjusted EBITDA and the normalization of depreciation to circa 6% of revenue following a step up in capex in recent years.

Speaker #2: And I expect capex to be £30 million per annum. The effective tax rate on adjusted earnings per share was 27.5%, reflecting some disallowable expenditure and the UK rate of 25%, and the Australia rate of 30%.

Speaker #2: Free cash flow of £69.2 million was generated in the year, a decrease of 4.2%, with adjusted EBITDA growth offset by adverse working capital movements.

Robin Alfonso: Free cash flow of GBP 69.2 million was generated in the year, a decrease of 4.2%, with adjusted EBITDA growth offset by adverse working capital movements, mainly from changes in buying relationships in the year, which, whilst generating cost savings, resulted in a slight adverse working capital movement. There was also an impact from timing of research and development expenditure receipts. Operating cash conversion remained above our 70% target, at 70.6% for the financial year. It is important to note that included in this is our maintenance CapEx of GBP 11.5 million. We have a healthy balance sheet with GBP 350 million of debt facility and headroom within our leverage target ceiling, and therefore capital available to support our investment opportunities. Maintaining this healthy balance sheet is our first capital allocation priority, and the continued focus on operating cash generation and the refinancing I mentioned earlier are both important in this regard.

Speaker #2: Mainly from changes in buying relationships in the year which, whilst generating cost savings, resulted in a slight adverse working capital movement. There was also an impact from timing of research and development expenditure receipts.

Speaker #2: Operating cash conversion remained above our 70% target at 70.6% for the financial year, and it is important to note that included in this is our maintenance capex of £11.5 million.

Robin Alfonso: It is important to note that included in this is our maintenance CapEx of GBP 11.5 million. We have a healthy balance sheet with GBP 350 million of debt facility and headroom within our leverage target ceiling, and therefore capital available to support our investment opportunities. Maintaining this healthy balance sheet is our first capital allocation priority, and the continued focus on operating cash generation and the refinancing I mentioned earlier are both important in this regard.

Speaker #2: We have a healthy balance sheet with a £350 million debt facility and headroom within our leverage target ceiling, and therefore capital available to support our investment opportunities.

Speaker #2: Maintaining this healthy balance sheet is our first capital allocation priority, and the continued focus on operating cash generation and the refinancing I mentioned earlier are both important in this regard.

Speaker #2: Under our capital allocation framework, which has not changed, we then have a number of options to deploy capital to generate increased value for shareholders and other stakeholders.

Robin Alfonso: Under our capital allocation framework, which has not changed, we then have a number of options to deploy capital to generate increased value for shareholders and other stakeholders. We recognize that ordinary dividends are an important component of shareholder returns. We have maintained a progressive dividend policy under which we are recommending the payment of a final dividend of 9p per share in respect of the financial year just gone. Our remaining capital is then directed to whichever option generates the highest risk-adjusted return over the longer term. There are three main options. The first of which is an attractive pipeline of accretive acquisition opportunities that are focused in the past three years in Australia. We are also looking at opportunities for accretive UK acquisitions, and I am delighted that we have signed contracts for the acquisition of a large practice in the UK, which we expect to complete in the coming weeks.

Speaker #2: We recognise that ordinary dividends are an important component of shareholder returns. With our maintained progressive dividend policy, we are recommending the payment of a final dividend of £0.09 per share in respect of the financial year just gone.

Speaker #2: Our remaining capital is then directed to whichever option generates the highest risk-adjusted return over the longer term. There are three main options, the first of which is an attractive pipeline of accretive acquisition opportunities, with our focus in the past three years being in Australia.

Robin Alfonso: Our remaining capital is then directed to whichever option generates the highest risk-adjusted return over the longer term. There are three main options. The first of which is an attractive pipeline of accretive acquisition opportunities that are focused in the past three years in Australia. We are also looking at opportunities for accretive UK acquisitions, and I am delighted that we have signed contracts for the acquisition of a large practice in the UK, which we expect to complete in the coming weeks.

Speaker #2: We are also looking at opportunities for accretive UK acquisitions, and I'm delighted that we have signed contracts for the acquisition of a large practice in the UK, which we expect to complete in the coming weeks.

Speaker #2: We're anticipating investing £50 million per annum in acquisitions, but we will retain flexibility to make additional attractive acquisition opportunities where the opportunity presents. We have capital investment opportunities to invest in organic growth.

Robin Alfonso: We anticipate investing GBP 50 million per annum in acquisitions, but we will retain flexibility to make additional attractive acquisition opportunities where the opportunity presents. We have capital investment opportunities to invest in organic growth. Please note essential maintenance CapEx is included within our 70% plus operating cash conversion. We continue to adopt a disciplined approach to this investment, which is aimed at delivering accretive shareholder returns significantly in excess of the company's cost of capital. Our investment is focused on driving increased revenue and enhanced margins through improved clinical facilities and equipment, enhanced client experience and loyalty through new technology, and improved employee engagement and retention. Having increased capital expenditure in recent years, we expect a reduction in the coming years with total investment, including maintenance CapEx, expected to be GBP 30 million per annum. Each investment will be assessed against our criteria and other uses of capital.

Speaker #2: Please note, essential maintenance capex is included within our 70%+ operating cash conversion. We continue to adopt a disciplined approach to this investment, which is aimed at delivering accretive shareholder returns significantly in excess of the company's cost of capital.

Speaker #2: Our investment is focused on driving increased revenue and enhanced margins through improved clinical facilities and equipment, enhanced client experience and loyalty through new technology, and improved employee engagement and retention.

Robin Alfonso: Our investment is focused on driving increased revenue and enhanced margins through improved clinical facilities and equipment, enhanced client experience and loyalty through new technology, and improved employee engagement and retention. Having increased capital expenditure in recent years, we expect a reduction in the coming years with total investment, including maintenance CapEx, expected to be GBP 30 million per annum. Each investment will be assessed against our criteria and other uses of capital.

Speaker #2: Having increased capital expenditure in recent years, we expect a reduction in the coming years, with total investment, including maintenance capex, expected to be £30 million per annum.

Speaker #2: Each investment will be assessed against our criteria and other uses of capital. Any capital deemed surplus to our requirements may be returned to shareholders, including in situations where a return to shareholders is the most accretive of the three options.

Robin Alfonso: Any capital deemed surplus to our requirements may be returned to shareholders, including in situations where return to shareholders is the most accretive of the three options. We completed a GBP 20 million share buyback in the financial year in support of our step up to the main market in January, and in May, we announced a GBP 50 million share buyback program, which is ongoing and which we expect to complete in the next couple of months. We recognize differing shareholder appetites for leverage, but we continue to believe leverage should be maintained at no more than 2x bank debt to EBITDA. However, if additional attractive acquisitions arise, we would consider temporarily increasing leverage above 2x, provided there is a clear runway to return to below 2x leverage. I will now hand over to Paul to discuss some of our key growth drivers.

Speaker #2: We completed a £20 million share buyback in the financial year in support of our step up to the Main Market in January, and in May we announced a £50 million share buyback programme, which is ongoing and which we expect to complete in the next couple of months.

Speaker #2: We recognise differing shareholder appetites for leverage, but we continue to believe leverage should be maintained at no more than two times bank debt to EBITDA.

Speaker #2: However, if additional attractive acquisitions arise, we would consider temporarily increasing leverage above two times, provided there is a clear runway to return to below two times leverage.

Speaker #2: I will now hand over to Paul to discuss some of our key growth drivers.

Speaker #1: Thank you, Robin. We continue to see good opportunities for accretive growth through acquisitions in the UK and Australia. Both markets are large, and we have approximately a 9% share of practices in the UK and approximately a 2% share in Australia.

Paul Higgs: Thank you, Robin. We continue to see good opportunities for accretive growth through acquisitions in the UK and Australia. Both markets are large. We have a circa 9% share of practices in the UK and circa 2% share in Australia, which should give plenty of opportunity for further acquisitions. This slide provides a recap on the Australia market, which has approximately 3,600 practices, of which some 1,400 are companion animal practices in large metropolitan areas. Of these, about 1,100 remain in private ownership and hence will potentially come up for sale in the future. Of these, we expect around 40% to meet our current acquisition criteria, albeit that can evolve as we gain more scale. Where we have made offers on similar practices to date, we have achieved a 50% win rate, and hence we have a significant opportunity for further scale.

Speaker #1: Which should give plenty of opportunity for further acquisitions. This slide provides a recap on the Australian market, which has approximately 3,600 practices, of which some 1,400 are companion animal practices in large metropolitan areas.

Speaker #1: Of these, about 1,100 remain in private ownership and, hence, will potentially come up for sale in the future. And of these, we expect around 40% to meet our current acquisition criteria, albeit that can evolve as we gain more scale.

Speaker #1: Where we have made offers on similar practices to date, we have achieved a 50% win rate. Hence, we have a significant opportunity for further scale.

Speaker #1: Accordingly, Australia has the potential to become a significant component of the group. Coupled with this, we are confident in our ability to make accretive UK acquisitions, and as Richard mentioned, attractive UK M&A opportunities are starting to materialise as expected.

Paul Higgs: Accordingly, Australia has the potential to become a significant component of the group. Coupled with this, we are confident in our ability to make accretive UK acquisitions, and as Richard mentioned, attractive UK M&A opportunities are starting to materialize as expected. We have exchanged contracts on a practice in the UK for GBP 15 million consideration and at an accretive multiple. I am pleased that we have a growing pipeline of additional opportunities. Multiples we have paid in Australia are typically 6x EBITDA. Given we generate greater synergies in the UK, we can afford slightly higher multiples, but they will remain lower than our implied group multiple. In all acquisitions, we will take care to ensure that we gain CMA or ACCC approval where appropriate. A key element in support of our inorganic growth is in ensuring we continue to develop our product offering so that it remains compelling to our clients.

Speaker #1: And we have exchanged contracts on a practice in the UK for £15 million consideration and at an accretive multiple. I'm pleased that we have a growing pipeline of additional opportunities.

Speaker #1: Multiples we've paid in Australia are typically six times EBITDA. Given we generate greater synergies in the UK, we can afford slightly higher multiples, but they will remain lower than our implied group multiple.

Paul Higgs: Multiples we have paid in Australia are typically 6x EBITDA. Given we generate greater synergies in the UK, we can afford slightly higher multiples, but they will remain lower than our implied group multiple. In all acquisitions, we will take care to ensure that we gain CMA or ACCC approval where appropriate. A key element in support of our inorganic growth is in ensuring we continue to develop our product offering so that it remains compelling to our clients.

Speaker #1: In all acquisitions, we will take care to ensure that we gain CMA or ACCC approval where appropriate. A key element in support of our inorganic growth is ensuring we continue to develop our product offering so that it remains compelling to our clients.

Speaker #1: With this in mind, we launched our new Healthy Pet Club Advanced offer on July 1st, having successfully trialed this across a number of our practices in the past financial year.

Paul Higgs: With this in mind, we launched our new Healthy Pet Club Advanced offer on 1 July, having successfully trialed this across a number of our practices in the past financial year. This builds on our existing core HPC preventative healthcare scheme, which provides six monthly checkups with a vet or a nurse, regular flea and worming treatments, and, where appropriate, additional discounts on veterinary fees and drugs. However, for an additional monthly fee, HPC Advanced customers also have access to unlimited consultations, and feedback from our clinical teams and clients is that removing that one-off cost of a consultation is likely to result in clients bringing their pets sooner where they have concerns, and leading to better patient outcomes and client relationships. We are encouraged that around 14,500 clients have already joined HPC Advanced since launch.

Speaker #1: This builds on our existing core HPC preventative healthcare scheme, which provides six-monthly checkups with a vet or a nurse, regular free deworming treatments, and, where appropriate, additional discounts on veterinary fees and drugs.

Speaker #1: However, for an additional monthly fee, HPC Advanced customers also have access to unlimited consultations. Feedback from our clinical teams and clients is that removing the one-off cost of a consultation is likely to result in clients bringing their pets sooner when they have concerns, leading to better patient outcomes and client relationships.

Speaker #1: We're encouraged that around 14,500 clients have already joined HPC Advanced since launch, and we introduced a new online sign-up journey for clients to access this in July.

Paul Higgs: We introduced a new online sign-up journey for clients to access this in July. Whilst our overall HPC membership has reduced slightly over the last year, we continue to see a steady increase in HPC revenues, with total revenue of GBP 95.5 million in the financial year to June from HPC membership fees. In addition, these members will be incurring additional amounts in caring for their animals through fees and medicines where their animals need reactive care. Another key driver of our organic growth is our focus on improving the client experience, making it easier for clients to engage with us and building long-term trusted relationships. We already have foundations in place through the technology investments and developments that we have made in the past few years, including our common cloud-based practice management systems, which has open APIs, allowing us to add additional bolt-on capability.

Speaker #1: Whilst our overall HPC membership has reduced slightly over the last year, we continue to see a steady increase in HPC revenues, with total revenue of £95.5 million in the financial year to June from HPC membership fees.

Speaker #1: In addition, these members will be incurring additional amounts in caring for their animals through fees and medicines where their animals need reactive care. Another key driver of our organic growth is our focus on improving the client experience, making it easier for clients to engage with us and building long-term, trusted relationships.

Speaker #1: We already have foundations in place through the technology investments and developments that we have made in the past few years including our common cloud-based practice management systems which has open APIs allowing us to add additional bolt-on capability.

Speaker #1: We have a number of enhanced client experience features, which are either fully live or on trial, such as online booking, HPC digital sign-up, an AI scribe tool for enhanced consultations, and two-way client conversations via SMS.

Paul Higgs: We have a number of enhanced client experience features which are either fully live or on trial, such as online booking, HPC digital sign-up, an AI scribe tool for enhanced consultations, and two-way client conversations via SMS. We are developing additional features to drive further improvements in the client experience and improved efficiency, which should, in turn, lead to increased operating margins. These include a client logged in state for self-serve, further enhancements to the digital client journey, and extension of two-way client conversations to include WhatsApp and MMS, and improved resource and rostering. Ultimately, we see an opportunity for a digital app which will allow clients to manage their pet's health in conjunction with CVS. In support of this, we are also strengthening our executive team through the imminent recruitment of a Chief Client Officer.

Speaker #1: We're developing additional features to drive further improvements in the client experience and improved efficiency, which should in turn lead to increased operating margins. These include a client logged-in state for self-serve, further enhancements to the digital client journey, and extension of two-way client conversations to include WhatsApp and MMS.

Speaker #1: And improved resource and rostering. Ultimately, we see an opportunity for a digital app, which will allow clients to manage their pets' health in conjunction with CVS.

Speaker #1: In support of this, we are also strengthening our executive team through the imminent recruitment of a Chief Client Officer. We now have consistent joint branding of our UK companion animal practices, with the local practice name being used alongside CVS.

Paul Higgs: We now have consistent joint branding of our UK companion animal practices, with a local practice name being used alongside CVS Vets. This joint branding brings new opportunities for the use of more central marketing and CRM activity, as well as meeting the requirements under the CMA remedies. Like me, our vets are pleased to see the conclusion of the CMA investigation, and we are fully prepared to deliver these requirements. The establishment of the national CVS Vets joint brand can help enhance our client awareness and to drive footfall back into practice through targeted CRM campaigns. We are now able to undertake national marketing campaigns in support of the activity, which we continue to do locally in practice.

Speaker #1: This joint branding brings new opportunities for the use of more central marketing and CRM activity, as well as meeting the requirements under the CMA remedies.

Speaker #1: And like me, our vets are pleased to see the conclusion of the CMA investigation, and we are fully prepared to deliver these requirements. The establishment of the National CVS Vets Joint Brand can help enhance our client awareness and drive footfall back into practice through targeted CRM campaigns.

Speaker #1: We're now able to undertake national marketing campaigns in support of the activity, which we continue to do locally in practice. We have a rich dataset within our common practice management system, and we can now target selected clients with specific breeds and pet ages to support them in seeking care for common issues.

Paul Higgs: We have a rich data set within our common practice management system, and we can now target selected clients with specific breeds and pet ages to support them to seek care for common issues. This positions us to generate increasingly effective returns from marketing and CRM activity, while building on our established reputation as a trusted provider. CVS should, can, and does stand for care, value, and service. As Chief Veterinary Officer, I am immensely proud of our clinical and support colleagues and the care and value we provide to our clients and their animals. Through improving our clients' access to our services through digital enhancements and making it easier for them to engage with us, we will drive increased footfall, further enhance our client loyalty, and position CVS as the leading veterinary group in the markets in which we operate.

Speaker #1: This positions us to generate increasingly effective returns from marketing and CRM activity while building on our established reputation as a trusted provider. CVS should, can and does stand for care value and service unless chief veterinary officer I'm immensely proud of our clinical and support colleagues and the care and value we provide to our clients and their animals.

Speaker #1: Through improving our clients' access to our services through digital enhancements and making it easier for them to engage with us, we will drive increased footfall, further enhance our client loyalty and position CVS as the leading veterinary group in the markets in which we operate.

Speaker #1: I am confident in the opportunities this focus will bring, and I look forward to sharing further details on these developments in due course. For now, I'll hand back to Richard for some closing remarks.

Paul Higgs: I am confident in the opportunities this focus will bring and look forward to sharing further details on these developments in due course. For now, I will hand back to Richard for some closing remarks.

Speaker #2: Thank you for everything. We operate in a large and attractive veterinary market with strong fundamentals, and we have a clear strategy for growth.

Richard Fairman: Thank you, Paul. We operate in a large and attractive veterinary market, which has strong fundamentals, and we have a clear strategy for growth. Within the UK and Australia, we have opportunities for accretive acquisitions. We have completed two acquisitions in the new financial year to date in Australia, comprising four sites, and we have signed contracts on a further two acquisitions in Australia, a three-site practice in South Australia and a single-site practice in Western Australia. We have also signed contracts for the acquisition of a two-site, nine-vet Fibrocartilaginous Embolism practice in the UK at an attractive EBITDA multiple that is accretive to the group. We have a healthy balance sheet, clear and consistent capital allocation framework, and will continue to be disciplined in our approach to generate long-term shareholder returns. We have an experienced management team and are strengthening further through the imminent appointment of a Chief Client Officer.

Speaker #2: Within the UK, and in Australia, we have opportunities for accretive acquisitions. We have completed two acquisitions in the new financial year to date in Australia, comprising four sites, and we have signed contracts on a further two acquisitions in Australia: a three-site practice in South Australia, and a single-site practice in Western Australia.

Speaker #2: We have also signed contracts for the acquisition of a two-site, nine-vet FTE practice in the UK at an attractive EBITDA multiple that is accretive to the group.

Richard Fairman: We have also signed contracts for the acquisition of a two-site, nine-vet Fibrocartilaginous Embolism practice in the UK at an attractive EBITDA multiple that is accretive to the group. We have a healthy balance sheet, clear and consistent capital allocation framework, and will continue to be disciplined in our approach to generate long-term shareholder returns. We have an experienced management team and are strengthening further through the imminent appointment of a Chief Client Officer.

Speaker #2: We have a healthy balance sheet, a clear and consistent capital allocation framework, and will continue to be disciplined in our approach to generate long-term shareholder returns.

Speaker #2: We have an experienced management team and are strengthening further through the imminent appointment of a Chief Client Officer. We have seen a solid start to the new financial year and expect to perform in line with market expectations. We remain confident in our ability to deliver further sustained growth in shareholder value.

Richard Fairman: We have seen a solid start to the new financial year and expect to perform in line with market expectations, and we remain confident in our ability to deliver further sustained growth in shareholder value. The financial results announced today and our future growth reflect the continued dedication and professionalism of all CVS colleagues. I would like to take this opportunity to thank them for all their commitment to providing great care, value, and service to our clients and their animals. I look forward to further successful growth of the group in 2027 and beyond. Thank you.

Speaker #2: The financial results announced today and our future growth reflect the continued dedication and professionalism of all CVS colleagues. I would like to take this opportunity to thank them for their commitment to providing great care, value, and service to our clients and their animals.

Speaker #2: And I look forward to further successful growth of the group in 2027 and beyond. Thank you.

Speaker #1: Thank you to the management team for the presentation. We are now going to start the question and answer sessions. Just as a reminder, if you would like to ask a question, please type into the Q&A box situated on the right-hand side of the screen.

Operator: Thank you to the management team for the presentation. We are now going to start the question and answer sessions. Just as a reminder, if you would like to ask a question, please type into the Q&A box situated on the right-hand side of the screen. I will now hand over to Charlotte. Charlotte, sorry. I think you have to unmute yourself.

Speaker #1: I will now hand over to Charlotte.

Speaker #3: Charlotte, sorry. I think you may have to unmute yourself.

Speaker #4: Thank you, Robin. Digital price fell following what looked like a fairly solid set of results. Was there anything in the market's reaction that surprised you?

[Analyst]: Thank you, Robin. The share price fell following what looked like a fairly solid set of results. Was there anything in the market's reaction that surprised you?

Charlotte Page: Thank you, Robin. The share price fell following what looked like a fairly solid set of results. Was there anything in the market's reaction that surprised you?

Speaker #3: I guess the surprise was the reaction. As you say, the results were solid. Most of the key numbers were pre-announced in July. The reaction confused our brokers, and also the analysts that published positive notes off the back of those results.

Richard Fairman: Well, the surprise was the reaction. As you say, the results were solid. Most of the key numbers were pre-announced in July. The reaction confused our brokers and also the analysts that published positive notes off the back of those results. There was one erroneous article that was published first thing on the results day that was removed and corrected a couple of hours later. That is the only obvious reason for the reaction we saw on the day.

Speaker #3: There was one erroneous article that was published first thing on the results day. That was removed and corrected a couple of hours later. That's the only obvious reason for a reaction we saw on the day.

Speaker #4: And do you think now that the CMA investigation is behind us, investors will start looking more at the fundamentals of the sector?

[Analyst]: Do you think now the CMA investigation is behind us, investors will start looking more at the fundamentals of the sector?

Charlotte Page: Do you think now the CMA investigation is behind us, investors will start looking more at the fundamentals of the sector?

Speaker #3: I hope so, because the fundamentals remain very strong, and we have a great opportunity within the sector to deliver further growth. We are now through the CMA process, which is pleasing.

Richard Fairman: I hope so, because the fundamentals remain very strong, and we have a great opportunity within the sector to deliver further growth. We are now through the CMA process, which is pleasing. We are back to acquiring good quality practices in the UK, as well as the growth opportunities that we see continuing in Australia. Like-for-like growth obviously improved in the year as well over the previous year. The fundamentals and the outlook, I think, are much more positive.

Speaker #3: We are back to acquiring good-quality practices in the UK, as well as the growth opportunities that we see continuing in Australia. And like-for-like growth obviously improved in the year as well over the previous year.

Speaker #3: So, the fundamentals and the outlook, I think, are much more positive.

Speaker #4: Thank you, Richard. Where does the next level of growth come from for CVS? Is it organic, by putting up prices, seeing more animals, or through M&A—practices and acquisitions—in Australia and the UK?

[Analyst]: Thank you, Richard. Where does the next level of growth come from, CVS? Is it organic by putting up prices, seeing more animals, or M&A through practices and acquisitions in Australia and the UK?

Charlotte Page: Thank you, Richard. Where does the next level of growth come from, CVS? Is it organic by putting up prices, seeing more animals, or M&A through practices and acquisitions in Australia and the UK?

Speaker #3: Again, I'll pick that up. The growth is both inorganic growth through further acquisitions. We have been selective in our approach, as you know, and we will continue to be selective. But we do have accretive acquisition opportunities.

Richard Fairman: Again, I will pick that up. The growth is both. Inorganic growth through further acquisitions. We have been selective in our approach, as you know, and we will continue to be selective, but we do have accretive acquisition opportunities, a strong pipeline of opportunities in Australia that will be accretive to the group. We have just recently announced our first signed acquisition, yet to be completed, but signed acquisition in the UK for an accretive multiple. Organic growth will come from a combination of price and future volume. That volume clearly will naturally come as the COVID cohort of animals age, but it will also come from the continued focus of providing great care, value, and service to our clients.

Speaker #3: A strong pipeline of opportunities in Australia that will be accretive to the group. We've just recently announced our first signed acquisition—yet to be completed—but a signed acquisition in the UK for an accretive multiple.

Speaker #3: And then organic growth will come from a combination of price and future volume. That volume, clearly, will naturally come as the COVID cohort of animals age.

Speaker #3: But it will also come from the continued focus on providing great care, value, and service to our clients. It was great to see the client Net Promoter Score further improve last year, which reflects that when clients do bring their animals in for treatment, they really value the service and care they receive.

Richard Fairman: It was great to see the client Net Promoter Score further improve last year, which reflects that when clients do bring their animals in for treatment, they really value the service and the care they receive.

Speaker #4: Lifelike growth is currently not within the four to eight percent target range. Now, the CMA is behind us and also the weather comps. Can we expect a significant improvement, and will there be any benefit from the COVID cohorts hitting their highest spend years?

[Analyst]: Like-for-like growth is currently not within the 4% to 8% target range. Now the CMA is behind us and also the weather comms, can we expect a significant improvement? Will there be any benefit from the COVID cohort hitting their higher spend years?

Charlotte Page: Like-for-like growth is currently not within the 4% to 8% target range. Now the CMA is behind us and also the weather comms, can we expect a significant improvement? Will there be any benefit from the COVID cohort hitting their higher spend years?

Speaker #3: Robin, do you want to pick that up?

Richard Fairman: Robin, do you want to pick that up?

Speaker #1: Yeah, I can do. I think, clearly, we said we're confident of getting back to 4–8% like-for-like performance. We're not there yet.

Robin Alfonso: Yeah, I can do. I think clearly we've said we're confident of getting back to 4% to 8% like-for-like performance. We're not there yet. Clearly, there's some macro factors impacting, particularly the current cost of living. We have a number of actions that we're looking at to drive volume into our practices, some of which Paul talked about in terms of speaking to our existing clients and reminding them the value of visiting a practice, being visible online. We've also recently launched our new product, Healthy Pet Club Advanced. In terms of the COVID cohort, I think as animals age, invariably they will need increased veterinary care. However, there are different species, within those species there are different breeds, there are different sizes, and they will all age at a different pace. So our expectation is that we'll see a gradual improvement in performance over time.

Speaker #1: Clearly, there are some macro factors impacting, particularly the current cost of living, and we have a number of actions that we're looking at to drive volume into our practices.

Speaker #1: Some of which Paul talked about, in terms of speaking to our existing clients and reminding them of the value of visiting a practice, as well as being visible online.

Speaker #1: And also, we've recently launched our new product, Healthy Pet Club Advanced. In terms of the COVID cohort, I think as animals age, invariably there will be increased veterinary care.

Speaker #1: However, there are different species within those species. There are different breeds. There are different sizes. And they will all age at a different pace.

Speaker #1: So our expectation is that we will see a gradual improvement in performance over time, and what we caution is we probably won't see a step up in any one given year.

Robin Alfonso: What we caution is we probably won't see a step-up in any one given year. We do expect some tailwinds from the COVID cohort, and we're probably not quite there yet.

Speaker #1: So we do expect some tailwinds from the COVID cohort, and we're probably not quite there yet.

Speaker #4: Thanks, Robin. Do you believe CVS's organic performance compares to the industry as a whole, or are we performing better or worse?

[Analyst]: Thanks, Robin. Do you believe CVS's organic performance compared to the industry as a whole, or are we performing better or worse?

Charlotte Page: Thanks, Robin. Do you believe CVS's organic performance compared to the industry as a whole, or are we performing better or worse?

Speaker #3: We think we're performing in line, and there were various data points. We have the lab business we operate, which provides its services to many independent practices as well as CVS practices.

Richard Fairman: We think we are performing in line, and there are various data points we have. The lab business we operate provides its services to many independent practices as well as CVS practices, and it is roughly 50/50 the revenue we receive from third parties, and they are performing in line with us. We are seeing similar lab growth across the two businesses. We talk to many practice owners, independent practice owners. We support a number of independent practice owners, not just from our laboratories, but also the buying groups we offer, where they can access some of our scale purchasing power. They see very similar trends. We also monitor and talk to other corporate groups, and everyone in the UK is seeing a similar pattern of continued resilient demand for the reactive care, but weaker demand for preventative care and clients either coming in less often or delaying vaccinations for longer periods.

Speaker #3: And it's roughly 50-50, the revenue we receive from third parties. And they are performing in line with us. We're seeing similar lab growth across the two businesses.

Speaker #3: We talk to many practice owners—independent practice owners. We support a number of independent practice owners, not just through our laboratories, but also with the buying groups we offer.

Richard Fairman: We support a number of independent practice owners, not just from our laboratories, but also the buying groups we offer, where they can access some of our scale purchasing power. They see very similar trends. We also monitor and talk to other corporate groups, and everyone in the UK is seeing a similar pattern of continued resilient demand for the reactive care, but weaker demand for preventative care and clients either coming in less often or delaying vaccinations for longer periods.

Speaker #3: They can access some of our scale purchasing power, and they see very similar trends. We also monitor and talk to other corporate groups, and everyone in the UK is seeing a similar pattern of continued resilient demand for reactive care but weaker demand for preventative care, with clients either coming in less often or delaying vaccinations for longer periods.

Speaker #4: Thanks, Richard. Paul, can you let us know what you're seeing in the consulting room when it comes to new puppy and kitten visit trends?

[Analyst]: Thanks, Richard. Paul, can you let us know what you are seeing in the consulting room where it comes to new puppy and kitten visit trends?

Charlotte Page: Thanks, Richard. Paul, can you let us know what you are seeing in the consulting room where it comes to new puppy and kitten visit trends?

Speaker #3: And Paul, you need to unmute yourself.

Richard Fairman: Paul, you need to unmute yourself.

Speaker #2: It's probably just worth going back a step, just to take us back to the COVID years. But, obviously, we did see a significant increase in puppy and kitten acquisition from new pet owners.

Paul Higgs: It is probably just worth going back a step just to take us back to the COVID years, where obviously we did see a significant increase in puppy and kitten acquisition from new pet owners. Following that, we saw a little dip back below the average puppy and kitten acquisition, probably as a result of accelerated purchase for many of those new puppies and kittens. That is now stabilized. We are still seeing good new puppy and kittens coming into the practices. I think, though, we would be clear that that is a big focus for us.

Speaker #2: And again, following that, we saw a little dip back below the average puppy and kitten acquisition, probably as a result of accelerated purchase for many of those new puppies and kittens.

Speaker #2: That's now stabilized. We're still seeing good new puppies and kittens coming into the practices. I think, though, we would be clear that that is a big focus for us.

Speaker #2: And although we have the COVID cohort coming through, which will help us with growth over the coming years for chronic disease, it's really important that we maintain our focus on those new pet acquisitions to ensure that we have stable growth coming through in the next five to ten years after that, as they come through into their older years too.

Paul Higgs: Although we have the COVID cohort coming through, which will help us with growth over the coming years for chronic disease, it is really important that we maintain our focus on those new pet acquisitions to ensure that we have stable growth coming through in the next 5, 10 years after that as they come through into their older years, too. So at the moment, it feels relatively stable on the puppies and kittens following that dip after COVID, but we are very much focused on that as being part of our long-term growth for the future.

Speaker #2: So at the moment, it feels relatively stable on the puppies and kittens following that dip after COVID. But we are very much focused on that as being part of our long-term growth for the future.

Speaker #4: Thanks, Paul. Switching over to Australia: could Australia eventually become as important to CVS as the UK?

[Analyst]: Thanks, Paul. Switching over to Australia. Could Australia eventually become as important to CVS as the UK?

Charlotte Page: Thanks, Paul. Switching over to Australia. Could Australia eventually become as important to CVS as the UK?

Speaker #3: It could, and we're really pleased with our entry and also the quality of practices we've acquired. The engagement of the teams—we knew the clinical approach was very similar, but it's been really reassuring, the engagement of the teams we're working with.

Richard Fairman: It could, and we are really pleased with our entry and also the quality of practices we have acquired, the engagement of the teams. We knew the clinical approach was very similar, but it has been reassuring the engagement of the teams we are working with. We see a big opportunity in Australia. So yes, Australia could be a significant part of the group in the future.

Speaker #3: And we see a big opportunity in Australia, so yes, Australia could be a significant part of the group in the future.

Speaker #4: Thanks, Richard. Are the practices we are buying in Australia generating better returns than those in the UK, and are they actually any cheaper? In addition, why do Australian practices generate higher EBITDA margins?

[Analyst]: Thanks, Richard. Are the practices we are buying in Australia generating better returns than the UK, and are they actually any cheaper? In addition, why do Australian practices generate higher EBITDA margins?

Charlotte Page: Thanks, Richard. Are the practices we are buying in Australia generating better returns than the UK, and are they actually any cheaper? In addition, why do Australian practices generate higher EBITDA margins?

Speaker #3: Again, Robin, that's maybe one for you to address.

Richard Fairman: Robin, that is maybe one for you to address.

Speaker #1: Yeah, I suppose from a valuations perspective, we are seeing good returns, and we're expecting to see good returns for both acquisitions in Australia and, indeed, our announced acquisition in the UK.

Robin Alfonso: Well, I suppose from a valuations perspective, we are seeing good returns, and we are expecting to see good returns for both acquisitions in Australia and indeed our announced acquisition in the UK. It is worth noting, I suppose some differences in that Australia has a higher corporation tax rate at 30% versus 25% in the UK. And whilst we are pleased that we are starting to deliver some synergies in Australia, particularly buying synergies, we typically get higher synergies for acquisitions also in the UK. I suppose for us, we see good opportunity to acquire in both territories, and we see good potential returns and accretive returns overall for the group.

Speaker #1: It's worth noting, I suppose, some differences in that Australia has a higher corporation tax rate — at 30%, versus 25% in the UK. And whilst we are pleased that we are starting to deliver some synergies in Australia, particularly buying synergies, we typically get higher synergies for acquisitions also in the UK.

Speaker #1: So, I suppose, for us, we see good opportunity to acquire in both territories, and we see good potential returns and accretive returns overall for the Group.

Speaker #1: From an EBITDA margin perspective, I suppose we've been very clear in terms of our entry into Australia, that we've been focused on larger practices, in major conversations with larger vet teams, and typically they will also, therefore, have the higher EBITDA margins.

Robin Alfonso: From an EBITDA margin perspective, I suppose we have been very clear in terms of our entry into Australia that we have been focused on larger practices in major conurbations with larger vet teams, and typically they will also therefore have the higher EBITDA margins. But if I think about our practices in the UK, we have a more mixed cohort of practices in that we have some large practices and some smaller practices, and therefore, the average is slightly lower from a practice margin perspective. So we are seeing good margins, but I think it is reflective of the assets that we are acquiring in that territory.

Speaker #1: If I think about our practices in the UK, we have a more mixed cohort of practices and that we have some large practices and some smaller practices and therefore the average is slightly lower from a kind of a practice margin perspective.

Speaker #1: So, we are seeing good margins, but I think it's reflective of the assets that we're acquiring in that territory.

Speaker #4: Thanks, Robin. Moving back to the CMA in the UK, now the CMA investigation is finally out of the way with the publication of the formal final orders last week.

[Analyst]: Thanks, Robin. Moving back to the CMA in the UK. The CMA investigation is finally out of the way with the publication of the four final orders last week. Can management get back to concentrating on growing the business rather than dealing with regulators?

Charlotte Page: Thanks, Robin. Moving back to the CMA in the UK. The CMA investigation is finally out of the way with the publication of the four final orders last week. Can management get back to concentrating on growing the business rather than dealing with regulators?

Speaker #4: Can management get back to concentrating on growing the business, rather than dealing with regulators?

Speaker #3: Yeah, we have been very focused on running and growing the business over the last two years of the market investigation. But clearly, now that we're through that investigation and we've got the final certainty, we can move forward and hopefully accelerate the growth we've seen in recent years.

Richard Fairman: Yeah, we have been very focused on running and growing the business over the last 2 years of the market investigation. But clearly, now that we are through that investigation, we have got the final certainty. We can clearly move forward and hopefully accelerate the growth we are seeing in recent years.

Speaker #4: And are we seeing more independent vets interested in selling their practice to CVS?

[Analyst]: Are we seeing more independent vets' interest in selling their practice to CVS?

Charlotte Page: Are we seeing more independent vets' interest in selling their practice to CVS?

Speaker #3: We do suspect there's some pent-up demand from independent practice owners who haven't really had a market-selling scene in the last couple of years in the same way they had prior to the CMA investigation.

Richard Fairman: We do suspect there is some pent-up demand from independent practice owners who have not really had a market to sell into in the last couple of years, in the same way they had prior to the CMA investigation. I think we also understand that some independent practice owners are concerned that the CMA outcome is potentially worse for them than the larger corporate groups in terms of the compliance burden for them running individual practices versus us with a much bigger group and spreading that kind of burden across 400 practices. So, yes, there is, we think, increased demand, and obviously, that does present an opportunity for us.

Speaker #3: I think we also understand that some independent practice owners are concerned that the CMA outcome is potentially worse for them than for the larger corporate groups, in terms of the compliance burden for them running individual practices versus us, with a much bigger group and spreading that kind of burden across 400 practices.

Speaker #3: So yes, we think there is increased demand, and obviously that does present an opportunity for us.

Speaker #4: Thanks, Richard. Switching over to the divisions of CVS, why does CVS have an online retail business if a tiny part of group profit and makes a very small margin?

[Analyst]: Thanks, Richard. Switching over to the divisions of CVS. Why does CVS have an online retail business? It is a tiny part of group profit and makes a very small margin.

Charlotte Page: Thanks, Richard. Switching over to the divisions of CVS. Why does CVS have an online retail business? It is a tiny part of group profit and makes a very small margin.

Speaker #3: We see the online retail businesses, of course, of the group. It is small, but it's growing. We sell both pet food and drugs online.

Richard Fairman: We see the online retail business as core to the group. It is small, but it is growing. We sell both pet food and drugs online. Clearly, the more drugs we purchase for online sale, that helps with our overall group purchasing power and obviously benefits the practice division as well. Food we see as an increasing opportunity. Indeed, we have increased our food sales online significantly over the last 10 years. All of our practice clients buy food for their pets day in, day out, or month in, month out, rather. That seems to be a big opportunity for us and one we have not really monetized yet.

Speaker #3: Clearly, the more drugs we purchase for online sale, that helps with our overall group purchasing power and obviously benefits the Practice Division as well.

Speaker #3: And food, we see, is an increasing opportunity, and indeed we've increased our food sales online significantly over the last 10 years. All of our practice clients buy food for their pets day in, day out—or month in, month out, rather.

Speaker #3: And that seems to be a big opportunity for us, and one we haven't really monetized yet. The reason it's an opportunity is when clients choose a food for their pets, it's often based on guidance from the breeder, who may have started the puppy or kitten on a certain brand.

Richard Fairman: The reason it is an opportunity is when clients choose a food for their pets, it is often based on guidance from the breeder, who may have started the puppy or kitten on a certain brand, and the pet has got used to it, and they have continued with that brand. Or from time to time, vets have recommended a different clinical diet or different life stage diet. Clients value vet recommendations, and therefore, there is an opportunity for us to monetize that, and that does feel like an untapped opportunity.

Speaker #3: And the pets got used to it, and they’ve continued with that brand. From time to time, vets have recommended a different clinical diet or different life stage diets, and clients value vet recommendations. Therefore, there is an opportunity for us to monetize that.

Speaker #3: And that does feel like an untapped opportunity.

Speaker #4: Thanks, Richard. Moving on to the share buyback, why was the share buyback all about moving up to the main market, and why would CVS spend money on a share buyback?

[Analyst]: Thanks, Richard. Moving on to the share buyback. Was the share buyback all about moving up to the main market? Why would CVS spend money on a share buyback? Would paying back some debt be a safer option?

Charlotte Page: Thanks, Richard. Moving on to the share buyback. Was the share buyback all about moving up to the main market? Why would CVS spend money on a share buyback? Would paying back some debt be a safer option?

Speaker #4: Would paying back some debt be a safer option?

Speaker #3: We are fortunate to have relatively low levels of debt, and the first share buyback of £20 million that we announced this time last year was very much in support of the step-up from AIM to the main market.

Richard Fairman: We are fortunate to have relatively low levels of debt. The first share buyback of GBP 20 million that we announced this time last year was very much in support of the step up from AIM to the main market. That share buyback was completed in January this year, just prior to the step up. In the spring, we announced a further share buyback of up to GBP 50 million, and that was in support of a number of reasons. The share price clearly was subdued. We have capital to deploy, and we have options in how we deploy our capital. We have a number of accretive acquisition opportunities, and as I said earlier, it is great that the UK market hopefully is now opening up for us as well.

Speaker #3: And that share buyback was completed in January this year, just prior to the step-up. Then in the spring, we announced a further share buyback of up to £50 million, and that was in support of a number of reasons. The share price, clearly, was subdued.

Speaker #3: We have capital to deploy, and we have options in how we deploy our capital. We have a number of accretive acquisition opportunities, and as we said earlier, it's great that the UK market is hopefully now opening up for us as well.

Speaker #3: But when our shares, or implied share price multiple, is so low, using our own funds to buy back shares is also a good use of capital.

Richard Fairman: When our shares or implied share price multiple is so low, using our own funds to buy back shares is also a good use of capital. So it is something we will keep under review. We held an investor event in July where we gave considerable detail in terms of our capital allocation framework and also the returns we generate or have been generating from investments. We also said then, which continues to apply now, that we will keep our capital allocation priorities under review.

Speaker #3: So it's something we will keep under review. We held an investor event in July where we gave considerable detail in terms of our capital allocation framework and also the returns we generate or have been generating from investments and we also said then which continues to apply is now that we will keep our capital allocation priorities under review.

Speaker #4: Thanks, Richard. Just another question is coming on the CMA. How do we expect the CMA’s written prescription and own-brand medicine disclosure requirements to affect CVS’s medicine revenue margins and customer retention?

[Analyst]: Thanks, Richard. Just another question has come in on the CMA. How do we expect the CMA's written prescription and own brand medicine disclosure requirements to affect CVS's medicine revenue margins and customer retention?

Charlotte Page: Thanks, Richard. Just another question has come in on the CMA. How do we expect the CMA's written prescription and own brand medicine disclosure requirements to affect CVS's medicine revenue margins and customer retention?

Speaker #3: And Paul, maybe that's one for you to pick up.

Richard Fairman: Paul, maybe that is one for you to pick up.

Speaker #2: I think, in terms of what we're probably referencing, is the fact that we are obliged to inform owners that they can get a prescription online.

Operator: I think in terms of what we are really referencing is the fact that we are obliged to inform owners that they can get a prescription online. I think to give everyone the confidence, we already do that in many of the situations where the CMA are keen for us to be more open about that. For example, chronic medications, which is the key area the CMA are asking us to do so. Most of our colleagues, if not all, will already be having those conversations in practice. So although these conversations now have to happen, they already happen as good order anyway, and I do not see that necessarily we will see a significant shift in that behavior, would be our main expectation on that.

Paul Higgs: I think in terms of what we are really referencing is the fact that we are obliged to inform owners that they can get a prescription online. I think to give everyone the confidence, we already do that in many of the situations where the CMA are keen for us to be more open about that. For example, chronic medications, which is the key area the CMA are asking us to do so. Most of our colleagues, if not all, will already be having those conversations in practice. So although these conversations now have to happen, they already happen as good order anyway, and I do not see that necessarily we will see a significant shift in that behavior, would be our main expectation on that.

Speaker #2: I think, to give everyone confidence, we already do that in many of the situations where the CMA are keen for us to be more open about it.

Speaker #2: So, for example, chronic medications—which is the key area that the CMA are asking us to focus on—most of our colleagues, if not all, will already be having those conversations in practice. So although these conversations now have to happen, they already happen as good order anyway, and I don't see that necessarily we'll see a significant shift in that behavior.

Speaker #2: That would be our main expectation on that. However, you know we're keen to make sure that we are completely compliant with the CMA, and we have everything in place around all of the remedies to ensure that our colleagues are aware and know what they need to do from a regulatory perspective.

Operator: However, we are keen to make sure that we are completely compliant with the CMA, and we have everything in place around all of the remedies to ensure that our colleagues are aware and know what they need to do from a regulatory perspective. Again, probably just worth mentioning around those written prescriptions, that many of what the CMA are asking us to do is actually already written into the code of conduct. So there are already professional obligations for us to give that information. This is now just set more clearly as to exactly what it is that we need to do.

Paul Higgs: However, we are keen to make sure that we are completely compliant with the CMA, and we have everything in place around all of the remedies to ensure that our colleagues are aware and know what they need to do from a regulatory perspective. Again, probably just worth mentioning around those written prescriptions, that many of what the CMA are asking us to do is actually already written into the code of conduct. So there are already professional obligations for us to give that information. This is now just set more clearly as to exactly what it is that we need to do.

Speaker #2: And again, it's probably worth mentioning, around those written prescriptions, that much of what the CMA are asking us to do is actually already written into the code of conduct.

Speaker #2: So there are already professional obligations for us to give that information. This is now just set more clearly as to exactly what it is that we need to do.

Speaker #4: Thanks, Paul. So the final question today is, what stops CVS from becoming a much bigger international veterinary group, rather than primarily a UK business with an Australian operation?

[Analyst]: Thanks, Paul. So the final question today is what stops CVS becoming a much bigger international veterinary group rather than primarily a UK business with an Australian operation?

Charlotte Page: Thanks, Paul. So the final question today is what stops CVS becoming a much bigger international veterinary group rather than primarily a UK business with an Australian operation?

Speaker #3: Good question. We have a great opportunity for further growth. For now, we see an accretive opportunity in both Australia and the UK, and plenty of white space to target.

Richard Fairman: Good question. We have a great opportunity for further growth. For now, we see an accretive opportunity in both Australia and the UK and plenty of white space to target. We have been selective, and we still believe that disciplined approach to capital deployment is important. But there is a good opportunity for inorganic growth as well as the increasing organic growth we are now seeing as well.

Speaker #3: We have been selective, and we still believe that a disciplined approach to capital deployment is important. But there is a good opportunity for inorganic growth, as well as the increasing organic growth we're now seeing as well.

Speaker #4: Thanks, Richard. May I pass back to you for any closing remarks?

[Analyst]: Thanks, Richard. May I pass back to you for any closing remarks?

Charlotte Page: Thanks, Richard. May I pass back to you for any closing remarks?

Speaker #3: Thank you, Charlotte, and thanks, Paul and Robin. And thank you, everyone else, for joining this call. The fundamentals of the sector remain strong, as we touched on at the start of this call.

Richard Fairman: Thank you, Charlotte, and thanks, Paul and Robin, and thank you everyone else for joining this call. The fundamentals of the sector remain strong as we touched on at the start of this call. We are well-placed within the sector. We have a good growth opportunity ahead of us. The team refinanced the business in May, and we have committed bank facilities now through to May 2030, and we have a one-year extension at our discretion. We have capital to deploy, relatively low leverage compared to many of our peers. We have a good opportunity for further growth, both organic growth through all the focus on our existing business across our practices, our laboratories, and our online retail business. We also now have acquisition opportunities opening up in the UK to complement those in Australia. Great opportunity ahead. We have a fantastic team of colleagues.

Speaker #3: We are well placed within the sector. We have a good growth opportunity ahead of us. The team refinanced the business in May, and we have committed bank facilities now through to May 2030, with a one-year extension at our discretion.

Speaker #3: So, we have capital deployed with relatively low leverage compared to many of our peers. And we have a good opportunity for further growth, both organic growth through all the focus on our existing business across our practices, our laboratories, and our online resource business.

Speaker #3: We also now have acquisition opportunities opening up in the UK to complement those in Australia, so great opportunity ahead. We have a fantastic team of colleagues, and CVS stands for Care, Value, and Service. Our colleagues do a fantastic job day in, day out, providing great care, value, and service to our clients and their animals.

Richard Fairman: CVS stands for Care, Value and Service, and our colleagues do a fantastic job day in, day out, providing great care, value, and service to our clients and their animals. We look forward to sharing further growth and further success in the months and years to come. Thank you for joining this call, and we will update you on our progress.

Speaker #3: And we look forward to sharing further growth and success in the months and years to come. Thank you for joining this call, and we will update you on our progress.

Speaker #1: Thank you to the management team for joining us today. That concludes the CVS Veterinary Group's investor presentation. Please take a moment to complete a short survey following the event.

Operator: Thank you to the management team for joining us today. That concludes the CVS Veterinary Group's investor presentation. Please take a moment to complete a short survey following the event. The recording of this presentation will be made available on Engage IR. I hope you've had a good webinar today.

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