CVS Group Stock

Good afternoon, everyone, and welcome to CVS Group's investor presentation. I'm Richard Fairman, CEO, and presenting alongside me today are Robin Alfonso, CFO; Paul Higgs, our Chief Veterinary Officer; and Ben Avery, our Australia MD. And whilst not presenting, Charlotte Page, our Head of Investor Relations, is also present. Following this presentation, we will answer questions from analysts. And if time permits, Charlotte will then pose any questions from investors.

I'm especially delighted to introduce Ben, who joined CVS in February this year. Ben lives in Sydney and has a wealth of operational health care experience through his previous roles in both human and veterinary health care, and Ben will provide a fuller introduction later. We are holding this presentation today to provide additional clarity on our long-standing and unchanged capital allocation policy, which we first set out in our Capital Markets Day in November 2022, and to give additional color on the returns we have generated from our investments.

So in this presentation, we will cover the following. I will kick off by discussing the favorable veterinary market dynamics and explain why CVS is well positioned within the sector. I will then provide some detail on our financial year to the 30th of June just gone following the publication of our full year trading update earlier this morning. Robin will provide a recap of our capital allocation priorities, explain the strong cash dynamics of our company and our healthy balance sheet.

Robin and Ben will then discuss our disciplined approach to acquisitions and will provide a recap on why we chose to enter the Australia veterinary services market back in July 2023. They will also provide additional color on our Australia business and our success to date, including the returns we are generating, the size of the opportunity ahead and also the synergies, which we expect to increase further with additional scale.

Paul will then discuss our disciplined approach to capital expenditure and the benefits and returns that grow CapEx, and Robin will share further details on returns we've generated from capital we have deployed in the past few years. And then I will wrap up with some closing remarks. This event is being live streamed, and a recording will be available on our investor website following this presentation. We have analysts present here in London, and there will be a chance for analyst questions at the end of this session. And as I mentioned earlier, if time permits, Charlotte will pose any investor questions from the call.

Now, I'm conscious many of you are very familiar with CVS and the veterinary sector we operate in, but others may be new to the story. And hence, I will kick off with an overview of CVS and the sector, give an update on recent developments and also share my own thoughts on why I believe you should invest in the sector and specifically invest in CVS and also why I believe now is an opportune time to do so.

So CVS was formed in 1999 when the sector was first deregulated, and we have grown significantly over the past 27 years, largely through acquisitions. And the graphic on the left of this slide gives a potted history of our development. We first became a public company in 2007, and we stepped up to the main market in January of this year with FTSE 250 inclusion following in March.

We operate 3 divisions. Firstly, we have our veterinary practices, which currently generate circa 89% of group revenue. We operate over 475 practices in the U.K. and Australia. Here in the U.K., we have 387 first opinion companion animal practices, 9 specialist-led referral hospitals, 23 equine practices and 15 farm practices, including a specialist poultry practice, Slate Hall. And in Australia, we now operate across 57 practice sites, all of which are first opinion companion animal practices.

Secondly, we have our laboratories, which contribute 4.5% of group revenue. We have 2 reference laboratories, Finn Pathologists in East Anglia and Axiom in the Southwest of the U.K. And we have a desktop laboratory analyzer business called MiLab. We provide laboratory services to our own practices and also to independent practices in the U.K.

And thirdly, we have an online retail business in the U.K. called Animed Direct, which currently accounts for circa 7% of group revenue. And this supplies pet food and also drugs to individual customers throughout the U.K. And across the group, we employ circa 9,000 colleagues, including 2,500 vets and 3,300 nurses. We are focused on providing high-quality clinical care to clients and their animals, delivered by a skilled team of clinical colleagues.

We are positioned as an employer of choice in the sector and are focused on attracting, retaining, developing and supporting our colleagues so that they are able to provide this great care. CVS operates in a market with strong fundamentals, which has delivered long-term structural growth through economic cycles. There are a number of compelling market dynamics, which make the veterinary sector attractive.

Firstly, the continued humanization of pets means that owners increasingly treat their pets as an integral part of their family and wish to look after them. This is evidenced by pets increasingly sleeping in bedrooms and often on beds, but is also seen in many other walks of life. For instance, it's now common for pets to be welcomed into shops and restaurants, and we increasingly see pets traveling on trains and airplanes.

I also understand that some owners have created social media accounts for their pets and are gaining increasing numbers of followers. Ultimately, this benefits us with clients willing to spend more to access high-quality veterinary care in order to keep their pets fit and healthy for as long as possible.

Secondly, we have seen an increase in the global pet population following the COVID-19 pandemic. This increase was more pronounced at the peak of COVID lockdowns when I think the benefits of companion animal ownership were widely recognized by us all. Most of the surge in demand then was satisfied through breeders increasing the supply of puppies and kittens. And hence, there's a COVID cohort of pets that are now 5 to 6 years old, and these will gradually age from here and naturally require more clinical care.

We recognize that the surge in ownership during peak COVID was partly an acceleration given it was a great time to train a puppy for those owners thinking about getting a dog. Hence, we have seen a reduction in pet ownership since peak COVID, but nonetheless, the pet population remains higher now than it was prior to the pandemic. And as those COVID pets age, we will naturally see increased demand. And I will ask Paul to provide some additional color on this shortly.

Thirdly, pets are 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. This increase in expectancy is driven by improved diet, but also by the advances in clinical care. And those very advances in clinical care are the fourth key driver. We are now able to provide better clinical care to animals than we could even 20 years ago. For example, in the area of oncology, we are now able to offer much more advanced and effective cancer treatment.

And finally, the veterinary sector is proving 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 this makes the market resilient. Surveys of pet owners consistently reveal that they are willing to sacrifice other spend to look after their pets. And this is reflected by the fact that we have never experienced a full year of negative growth.

From the chart on the right, you can see that CVS was consistently delivering like-for-like revenue growth between 5% and 6% prior to the COVID pandemic. This growth was against a backdrop then of a flat pet population and hence, was achieved through a combination of pricing and increased care. Now the past few years have seen far more volatility due to a number of factors, including the COVID-19 pandemic, the Competition and Markets Authority investigation, more modest price increases in the past 3 years, cost-of-living pressures and reduced consumer confidence, which has had an impact on footfall across the U.K. veterinary sector.

Notwithstanding the volatility in this period, we have still delivered average like-for-like revenue growth between 5% and 6%. We have also seen some significant inflationary increases in areas such as employers' national insurance, national minimum wage and national living wage increases and of course, higher utility costs. And as a result of the CMA process, we have applied more modest price increases over the past 3 years. And hence, we have had to work hard to maintain margins in this period, whilst also investing to position CVS well for further growth.

And this brings me neatly on to why I believe you should consider investing in the veterinary sector, why specifically you should consider investing in CVS and why I believe now is a great time to do so. The veterinary sector has delivered secular growth through economic cycles and outside of economic downturns has consistently delivered 4% to 6% growth. This is driven by the structurally favorable market dynamics and the advances in clinical care, which I discussed earlier. Demand for clinical care has proven resilient through economic cycles.

And I believe that AI will be an enabler to improving operational efficiencies over time, and I do not see AI as a threat. There will always be a need for vets to physically examine and provide treatment to animals. The sector has also proven to be relatively price inelastic. And now that we have the CMA final decision, I am confident that we can pass through price increases to cover inflationary costs.

These attractive features are evident in the U.K., Australia and other markets such as the U.S. and have been widely recognized. This is reflected in the significant number of corporate groups now operating in the veterinary sector and the extensive private equity investments we have seen. So why invest in CVS? We have established scale in the U.K. and are rapidly expanding our operations in Australia following our entry 3 years ago this very week.

The U.K. and Australia are both attractive markets, and we are well placed for further expansion through acquisition. CVS Australia is already a material contributor to the group. And we have a strong pipeline of Australian acquisition opportunities, which will bring further scale and improved synergies. And Ben will discuss this later. And we see an opportunity to return to accretive U.K. acquisitions. We have made a number of developments over the past few years, which position CVS well for future growth.

Through providing support and development opportunities to our colleagues, we have built a reputation as an employer of choice in both the U.K. and Australia. But this is naturally important in the recruitment, retention and engagement of our colleagues, but it's also important in positioning CVS as an acquirer of choice. Our U.K. companion animal practices have been on a common practice management system for a number of years. But we migrated to an improved cloud-based practice management system in the U.K. over 2 years ago.

This modern platform allows us to further enhance our customer experience and also streamline our operations through technology. We have a strong balance sheet and comfortable levels of leverage. And our recent successful refinancing means we have committed facilities through to May 2030 with a further 1-year extension at our discretion. Therefore, we are well placed to deliver further accretive growth through selective acquisitions.

And as I previously said, we have proven our ability to maintain margins despite the inflationary pressures we have faced into. And why do I believe now is a good time to invest in CVS? I referenced the increased pet ownership earlier and the specific COVID cohort of puppies and kittens. These pets are now typically 5 to 6 years old, and I have one at home and for the most part, still in their early healthy adult life stage.

However, these pets will gradually age. And as they do, they will naturally require more clinical intervention. Through the clinical care we can provide, CVS is best placed to capitalize on this growth. We now have CMA certainty, and we are advancing the implementation of the CMA remedies with prices displayed on all of our U.K. companion animal websites from late 2025 and now over 80% of our U.K. practices jointly branded.

And this joint branding creates new opportunities for us to increase client registrations and to drive increased footfall through targeted marketing and CRM. Notwithstanding the strong market fundamentals, the strength of CVS, the opportunity for growth through further acquisitions and the potential for margin enhancement in our existing operations, our valuation remains significantly below pre-CMA levels. We have not seen the re-rating we hoped for following our step-up from AIM to the Main Market and following the announcement of the CMA's final decision with the remedies generally considered benign.

In light of this, we recently announced a GBP 50 million share buyback program, and Robin will talk more about capital allocation later. I truly believe in the opportunity and indeed, a significant chunk of my own retirement savings are tied up in the success of CVS. Before we conclude this session, I mentioned earlier the benefit we will get over the next few years as the COVID cohort of puppies and kittens age.

And I will now ask Paul to join me on stage to illustrate this. Paul?

Thank you, Richard, and good afternoon, everybody. There's no doubt that the years 2020 and 2021 will be imprinted on all of our memories due to COVID. But during those years, many people found comfort in pet ownership and the sales of puppies and kittens soared. This larger-than-normal cohort of animals are now between the ages of 5 and 6 and on average, are in their most healthy and well-behaved years.

And this slide is to demonstrate the common patterns that we see in veterinary care involvement in the average pet. Look, it's fair to say that like anything, there will always be a spectrum of needs and some pretty big outliers. I personally have diagnosed a life-shortening cancerous bladder tumor in a 9-month-old Doberman puppy. I've also seen a very healthy 18-year-old cat who stepped into a veterinary surgery for the first time since they were neutered.

But the graph here in front of you is an illustration of Fido Smith, the average Joe of the dog world. So puppies and kittens should begin life with a few visits to the vet to set them up for a long and healthy life with vaccinations, preventative flea and worming and usually neutering. After that, most dogs and cats spend the next few years benefiting from occasional minor interventions for things like an ear infection, just like my own Springer Spaniel, intestinal upsets because younger dogs are definitely more likely to eat things that they definitely really shouldn't.

And then some minor injuries such as a torn claw or a cut. And a few unlucky pets will experience something much more significant, such as a fracture or an intestinal blockage. But thankfully, for our animals, these are, on average, not common occurrences. So during these early years, we focus on improving the overall well-being to help to try to delay the onset of age-based diseases through things like dental hygiene, good dietary management and weight control.

And HPC Advanced, our new PC offering, which we launched on the 1st of July, is a great product to help our clients to engage with this more. Now sadly, as much as we would all rather that this wouldn't be the case, age comes to our pets far too soon. And we haven't put the ages on here specifically because this varies dependent upon breeds, with the biggest negative predictor for life expectancy being body size.

However, certain breed types have genetic predispositions to diseases that make it less likely that they're going to reach double figures. And sadly, such as flat-coated retrievers who are rather prone to white blood cell cancers. And in fact, if you like to, you can challenge me in the Q&A to name a common breed associated disease for any breed you mentioned, although the more random that breed gets, the more unlikely it is that it's actually a breed.

But as age increases, we see progressively more interventions needed to maintain a good quality of life. Now sometimes this is just a bit of arthritis or maybe some infected teeth need to come out. But for some, we see a development of common age-related diseases such as heart disease, diabetes, kidney failure, Cushing's disease, overactive thyroid in cats and of course, dreaded cancer. Now thankfully, veterinary care has moved on over the years, meaning that where owners want to and where we believe it is ethically acceptable, there is much more that we can do.

In my career, the biggest step forward, as Richard has mentioned, has probably been in our capabilities to treat cancers, either with surgery, chemotherapy or radiotherapy. And critically, though, unlike ourselves, we only ever use these treatments to improve quality of life for as long as possible. Curative treatment doses often come with side effects that we can't really tolerate ethically.

So our case here represented by the bars, the blue and the pink, a Cavapoo puppy shows how she begins life, with spend mostly related to preventative health care in the blue. And then a period of relative health in which -- and this is the blue in her, she has some allergic skin disease, which results in ear infections but comes under good control with hypoallergenic diets. And then she's doing pretty well until at a health check at the age of 10, she's identified with a heart murmur, be a left-sided atypical systolic grade 3/6, if you all know what I mean by that. And she has a heart scan.

And this heart scan confirms the presence of something we would call Stage B2 mitral valve disease. And that means that she started on a medication called pimobendan, which she will stay on for the rest of her life. And again, she does pretty well for a couple of years after that. She needs some dental extractions at the age of 12. This is for cavity in her at this time and she has regular checkup for her heart.

And about 6 months later, her owner feels that her exercise tolerance is lower. And following our instructions, she finds that she's breathing fast when she's asleep, which is a warning sign of heart failure that we have prepared her for. X-rays confirmed that she has heart failure with some pulmonary edema or fluid in the lungs, and she is started on some diuretics.

Sadly, like many heart failure cases, she has a number of episodes of deterioration, needing about 24 hours of hospitalization and increased medication until the ripe old age of 13 years old. Her owner and her veterinary team agreed that euthanasia is the kindest final treatment for her. Her owner stays with her throughout her veterinary -- throughout as her veterinary team care as much for puppy's family as they do for puppy, ensuring that her last moment is calm and quiet as possible.

Thank you, Paul. I will now turn to our financial year just gone following the publication of our full year trading update earlier this morning. Revenue for the financial year was in excess of GBP 710 million, an increase of 5.9% over the previous year, with this growth being generated across all 3 of our divisions. Within this, like-for-like growth for the full year was 2.1%. Our like-for-like growth was impacted in the final quarter by continued weakness in U.K. consumer confidence and the exceptionally hot spells of weather in the U.K. at the end of May and 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 scheduled procedures were canceled. We expect to report full year adjusted EBITDA in line with market consensus. Adjusted EBITDA margin is expected to be broadly flat at circa 20%, reflecting our ability to maintain margins in the face of inflationary pressures. We completed a further 6 acquisitions in Australia in the financial year, comprising 14 sites for initial consideration of GBP 45 million.

And we have signed 2 further acquisitions, which we expect to complete in the coming weeks. And we currently now operate across 57 sites. Net debt at the end of June was circa GBP 200 million, and we have finished the financial year with leverage of 1.63x. Now we have significant headroom in both debt facilities and financial covenants and leverage remains below our 2x stated maximum. We will announce our full year results on the 24th of September, and I look forward to sharing further details then.

However, I'll now hand over to Robin, who will discuss our capital allocation priorities. Robin?

Thank you, Richard, and good afternoon, everyone. So this slide is a reminder of our disciplined approach to capital allocation, which we've applied consistently as a management team over the past few years. Whilst our approach hasn't changed, I think it's important to reiterate our capital allocation priorities and to update on our recently announced share buyback program.

Our capital allocation framework is underpinned by a hierarchy of clear priorities, supported by a disciplined approach under which each investment opportunity is assessed based on what is most accretive over the long term against other capital deployment opportunities before making investment decisions. So our first priority is to maintain a healthy balance sheet. We recently completed a successful refinancing of our bank debt, and we now have committed facilities through to May 2030 with a 1-year extension at our discretion.

We are pleased that these new facilities were secured with a syndicate of 8 banks and a 20 basis point improvement in margins with increased flexibility. We benefit from favorable cash flow dynamics with operating cash conversion in excess of 70%. This cash generation alongside our committed bank facilities and leverage at 30th of June of 1.63x provides us with capital for organic and inorganic growth and also gives us resilience through economic cycles.

We have significant headroom in both committed and undrawn bank facilities and bank covenants. One use of this capital is dividends. We recognize that ordinary dividends are an important component of shareholder returns, which is more important for some investors than for others. We have maintained a progressive dividend policy under which we expect to recommend the payment of a final dividend in respect to the financial year just gone. And we'll announce details of this alongside our full year results in September.

The remaining capital is then directed to whichever option generates the highest risk-adjusted returns over the longer term. We have 3 main options. Acquisitions, we have an attractive pipeline of accretive bolt-on acquisition opportunities currently focused in Australia. We expect to deploy circa GBP 50 million per annum in Australia, subject to timing and availability of opportunities that meet the group's criteria, and Ben will provide more color on these Australian opportunities later.

We'll also look to make accretive U.K. acquisitions and see an opportunity to further expand our presence in the U.K. We are confident that incremental long-term shareholder value will be created from further acquisitions. And whilst we anticipate investing GBP 50 million per annum, we will retain flexibility to make additional attractive acquisitions where the opportunity presents. We have CapEx. 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 take a disciplined approach to capital investment, which is aimed at delivering accretive shareholder returns significantly in excess of the company's cost of capital. This 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.

This investment naturally also leads to increased operational resiliency. Total capital investment, including maintenance CapEx, is expected to amount to approximately GBP 30 million per annum with each investment assessed against our criteria and other uses of capital. And Paul will provide further detail on this investment later.

And shareholder returns. Any capital deemed surplus to our requirements may be returned to shareholders, and that will include situations where a return to shareholders is the most accretive of the 3 options. We recently announced a GBP 50 million share buyback program. And as of last week, we've acquired 1.4 million shares at an average price of GBP 12.28 and spent over GBP 17 million in doing so.

We recognize differing shareholder appetite 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 that there's a clear runway to return to below 2x leverage. We will continue to keep capital allocation under close review, and we'll provide additional color on our approach and the returns we're generating in the remainder of this presentation, starting with acquisitions.

I'll now ask Ben to join me on stage to discuss our disciplined approach to acquisitions and the opportunity ahead.

Thank you, Robin, and good afternoon, everyone. As Richard mentioned, I joined CVS in February, and I can honestly say it's a business that I've wanted to be a part of for quite some time. Before I tell you why, just a quick personal note. I live in Sydney with my wife and daughter. And for how I got here, I've spent 15 years in health care across Australia and New Zealand, all of it in multisite clinical businesses, much of it growing through acquisition.

Most relevantly, I spent almost 5 years at VetPartners in Australia and New Zealand. I have to note that it is different to VetPartners here in the U.K. My role there included leading the business operations and strategy for -- across their 270-plus clinic network. That's where I worked first closely with Nathan Micallef, now our Acquisitions Director, integrating newly acquired clinics and setting them up to thrive.

It's also where I came to genuinely respect the veterinary profession and the dedication of the people within it. Most recently, I was the Chief Operating Officer at MoleMap under private equity ownership, overseeing 110 skin cancer clinics across Australia and New Zealand and leading the strategy and execution behind the network's growth. For a lot of that time at MoleMap, I was watching CVS from a distance. I saw the clinics being acquired and thought this business is getting something right to attract the caliber of clinic and clinician they were acquiring.

So when the opportunity came for me to join CVS, I couldn't be more excited. The thread running through my career is scaling multisite businesses on clinical excellence and commercial discipline. And that's exactly what I found here at CVS, and it's why I'm so pleased to be a part of it. I'll shortly provide some more color on the Australian operations.

But first, Robin will introduce this session with a brief recap.

As Richard mentioned, CVS was formed in 1999, and we were one of the first corporate consolidators of veterinary practices in the U.K. We've grown largely through acquisitions over the last 27 years, and most of that growth has been in the U.K., but we entered the Australian veterinary market in July 2023, 3 years ago this week. Both these markets are large and attractive with high levels of pet ownership and the same trend in humanization of pets.

We maintain a very disciplined approach to acquisitions as a management team and have consciously focused on acquiring high-quality companion animal practices. The multiples we are willing to pay for acquisitions are linked to our own current share price and the implied CVS multiple. Prior to the CMA investigation, we were acquiring practices in the U.K. at a multiple of circa 10x EBITDA, and this made sense at the time given CVS' multiple exceeded this.

Following the CMA process, together with the weaker economic backdrop in the U.K. and other macroeconomic factors, our implied CVS multiple has reduced to circa 8x, and hence, it does not currently make sense for us to acquire above this. Our recent focus has been on Australia, where we've been very selective in acquiring only the best practices at multiples of circa 6x. The market is large at GBP 3 billion with around 3,600 practices.

Consolidation is low at around 20%, with CVS representing roughly 1.5%. We are applying a proven model in a market that is years behind the U.K. in consolidation terms, and there's both a significant and exciting runway ahead. We've been selective about what we buy. Our focus has been on larger companion animal first opinion practices with good facilities in the major urban areas. Buying the right clinics with the right teams, operating to the right standard derisks our investment.

The U.K. market is larger at circa GBP 6.7 billion with around 5,600 practices. Whilst consolidation is much higher at around 60%, CVS only has circa 8% to 9% market share. Post the CMA, we expect multiples to fall and with plenty of white space, there is also an exciting opportunity to consolidate further.

On this slide is an illustration of what the acquisition funnel in Australia looks like and the process we follow. The majority of our leads are self-sourced with a number filtered out at Stage I, if they don't meet our selection criteria around location, number of vets, required clinical standards. For the roughly 60% that do meet our selection criteria, a business case is prepared to support a valuation and offer. 40% of the total will reach offer stage. All offers are approved by Executive Board members before they are issued.

A number of opportunities will fall out between meeting the acquisition criteria stage and the offer stage often because of more detailed inspection, there are gaps against our selection criteria. Of the offers made, roughly half are accepted. Whilst we're not prepared to overpay for assets, we will take into consideration in our valuation strategic opportunities that unlock value. The majority of offers accepted are completed. There are often issues that arise during due diligence, but that needs to be dealt with, but it is rare that it leads us to pulling out, but it does happen.

In Australia, the CMA equivalent is the ACCC. And since the 1st of Jan 2026, legislation changed that moved ACCC merger approval, in some cases, from a voluntary process to a mandatory one. We have proactively approached ACCC on a voluntary basis for some of our acquisitions to date, and all of those have been approved. The process is therefore well known to us, which is helpful because we're now almost of the size that we will need to approach the ACCC more regularly. As you see, this disciplined approach leads to us acquiring only 20% of all opportunities with many dropping out because they don't currently meet our selection criteria or valuation.

We now operate across 57 practice sites. As you can see on the map, these are located in major urban areas, such as Brisbane, Sydney, Melbourne, Adelaide and Perth. These are established high-quality practices, each with a strong reputation in its local community. That quality is what makes our growing presence in Australia create a genuine 2-way exchange. Our Australian teams benefit from the depth and experience of the wider group, and our U.K. colleagues gain fresh insights from high-quality practices we have acquired in Australia. We are actively facilitating that change across the group.

Standards of care are very similar across Australia and New Zealand. But I'm delighted to say Australia is ahead in some of the preventative medicine areas. Preventative dentistry is a really good example. Australian owners routinely bring their pets in for the kind of dental care people expect for themselves, such as scale and polishes and dental X-rays. While in the U.K., dentistry until now has been more reactive, resulting in extractions that could have been prevented if earlier intervention had occurred.

These are insights we are sharing across the group and we are learning in return. The U.K., for example, is more advanced in antimicrobial stewardship, which helps slow antibiotic resistance, an issue that matters for animals and people alike. That exchange of clinical knowledge points to something fundamental about this business. We are a people business and to sustain this financial performance and grow revenues and earnings over time, we need to attract and develop and retain high-quality colleagues.

Clinical development is a major driver of where vets and nurses choose to work. And our portfolio is built to deliver it. Our disciplined approach to acquisition and the clinical depth that follows creates a natural environment for colleagues to grow and develop. That depth is real and tangible across our Australian portfolio. We have sites offering CT imaging, advanced surgical capability, Internal Medicine and laparoscopic procedures. Clinical offerings that aren't offered in everyday GP practices routinely.

The practices we have acquired invested in those capabilities for a good reason. They deliver better outcomes for the pets in our care, and they attract and develop top talented colleagues, and they support strong revenues and healthy margins. Beyond local clinical development, we are using the breadth of our team to develop -- to deliver hands-on learning across the portfolio. And we are building meaningful clinical careers and pathways so that, that depth of opportunity is visible, structured and retained.

Together, that is something central to building CVS' reputation as a veterinary employer of choice in Australia. Australia -- CVS Australia is also reaching a scale where we're becoming known beyond just the veterinary sector into the broader health care market. And this is changing the caliber of talent we can attract. Leaders who have built and scaled businesses in complex regulated health care environments are now actively reaching out to join us.

Our Head of People and Culture is a good example. She brings deep M&A experience from a highly regulated aged care business that doubled in size in just 3 years. And we also balance that commercial capability with clinical leadership from within the veterinary profession. Our Veterinary Medical Director brings more than 23 years in practice, and that clinical credibility sits at the heart of everything that we do. We take the same deliberate approach to how we build our in-country support office.

We size appropriately so that the business always has what it needs for the next phase of growth. We leverage the strength of our established U.K. functions in areas such as finance, IT and procurement, which keeps our cost base efficient and creates real synergies. And where we add roles locally, we add proven leaders with the depth to scale with us. The result is that our foundations, our people and our systems are enablers of growth, never constraints on it.

And let me bring this to life with you with the clinical depth, the investment in people and the returns it generates with 2 examples from our portfolio. This is a single site practice in Adelaide, employing 5 vets. It's a great modern facility with modern clinical equipment, and it's a good example of a pattern we see right across our portfolio, where we invest in clinical depth and in developing our colleagues, patients get better standards of care and a strong performing business follows.

You can see that in 3 ways within this clinic. First, client acquisition is built on clinical education. The practice has published hundreds of clinical articles on its website. So that way, when pet owners search online for their pet's diagnosis, the practice's content ranks highly and bring those clients through the door. Footfall stays consistently strong because the marketing is genuinely useful to pet owners. This is something that we've actively learned from at this practice, and we're now building it into a scalable approach across the network rather than leaving it to -- leaving it as one clinic's advantage.

Second, we invest in developing our people. At this practice, we invested in in-clinic dental radiography training, lifting the vet confidence in identifying and recommending the right treatment. And dental procedures now account for strong patient volumes through this practice. When we build our team's clinical skills, patients get better care and the business benefits follow.

Third, the patient -- the clinic -- my apologies. Third, the clinic retains high-value surgical work in-house, including a substantial volume of orthopedic surgery rather than referring those cases out. Patients get continuity of care in a practice they know. Our colleagues get hands-on exposure to more complex cases, which builds their skills and their careers. And it makes the practice a referral center inside our own network because other clinics know their patients will get a great standard of care here.

That clinical focus shows up in the numbers. The practice has performed well since acquisition with revenues, margin and EBITDA all increasing. Gross margin has improved by 590 basis points and EBITDA margin around 1,000 basis point improvement. As you can see from the slide, we are generating good returns from our investment with an IRR pre-synergies of 17%, an expected payback period of 8 years based upon our current projections and an expected 3- to 5-year return on capital employed of between 26% and 31%.

Another example is this practice in New South Wales. This is a larger practice operating across 3 sites and employing 8 vets, again, with a great modern facility and the right clinical equipment. Like the Adelaide example, this practice shows the same pattern. Clinical depth and colleague development translates into better care for the patients and a strong performing business. It's an accredited hospital of excellence with an excellent reputation in its community.

This is an industry accreditation awarded by the Australian Small Animal Veterinarians Group to practices that meet the highest standards of clinical care, facilities and practice management, and it's held by only 50 hospitals nationally. Around 10% of those hospitals already sit within our own network, proof that practices holding the highest standards in the country are choosing CVS. The clinical offering is advanced, including soft tissue, surgery and orthopedic.

And the practice is Fear Free certified. It's a recognized veterinary standard for reducing stress and anxiety in patients. That certification reflects real investment in training the whole team, and it matters twice over. It supports better clinical outcomes and builds a level of trust with clients that keep them coming back and referring to others.

And alongside the clinical investment sits the commercial benefit every practice gains on joining us. Group buying power on drugs and consumables that deliver significant leverage in gross margin. This practice shows what that combination produces with clinical excellence driving revenues and group scale protecting the margin on every dollar of it. The results follow.

Revenue has grown by around 18% since acquisition. EBITDA margin has improved by around 990 basis points, reflecting a healthy, sustainable business built on that clinical foundation. This investment has an IRR, again, of pre-synergies of 14%, an expected payback period of 10 years based upon our current projections and an expected 3- to 5-year return on capital employed of between 19% and 23%.

Thanks, Ben. So there's a lot of information on this slide. The vertical axis on the chart is ROCE, return on capital employed. And the horizontal axis is time in years. The line on the chart represents what ROCE would have been over time based on a conservative IRR of 12%, which is above our weighted average cost of capital. You can see ROCE starts off low and increases over time.

The bars represent the ROCE performance for acquisitions in that cohort. So the first bar is the ROCE performance for acquisitions we've held for 1 year, so acquisitions we made in 2025. The bar is above the IRR line, so we're overperforming. The final bar represents the ROCE performance for acquisitions we've held for 7 years, so acquisitions that we made in 2019. Again, the bar is significantly this time above the IRR line, so we're overperforming.

Over the past 7 years, acquisitions in total are performing significantly above conservative IRR of 12%. For our Australian acquisitions, which does not currently include synergies in the business case, but we do expect synergies to add up to 3 percentage points on IRR. If we were to include exit assumptions as might be considered by, say, private equity, IRRs would potentially be significantly higher.

I said earlier that Australia represents both a significant and exciting runway, and I've tried to illustrate the size of the potential opportunity on this slide. In Australia, there are circa 3,600 practice sites, albeit given the size of Australia, many of these are in more rural areas. Our focus is in metro areas where there are significant populations of people and hence, a significant number of both pets and vets. Circa 1,440 practices will fall into metro areas. Of these, about 80% are in private ownership, which represents 1,152 independent practice sites.

And our experience is that roughly 40% will end up in an offer, which represents 461 practice sites. And at a win rate of 50%, would represent 230 sites and at an average EBITDA per site of GBP 0.4 million would represent a potential EBITDA opportunity of circa GBP 90 million. Importantly, as we grow, our criteria can also evolve. We have turned away more deals than we've gone ahead with, some because we felt they were slightly too small and some where the practice facilities needed improvement.

The majority of these remain in private ownership, and we have continued our dialogue with the vendors. Some of these will become attractive to us once they've reached the scale or once their facilities have been improved. If we include practices we already own, potential market growth -- and potential market growth, the Australia business can conservatively deliver between GBP 105 million and GBP 135 million EBITDA in time.

Hence, our target addressable market in Australia is significant. And I can easily see CVS Australia being as big as our U.K. business. We will continue to take a disciplined approach to acquisitions, both in Australia and in the U.K. and have a strong pipeline of Australian acquisition opportunities, and I look forward to completing further deals in due course.

I will now ask Paul to join me on stage to discuss our disciplined approach to capital expenditure.

Thanks, Robin. So alongside our focus on acquisitions to drive inorganic growth, we also recognize the opportunity to drive organic growth through capital investment. And this growth capital investment, whether in facilities, clinical equipment or technology is focused on delivering increased revenue and enhanced margins. Where it makes financial sense, and we are confident in the returns we are likely to generate, this growth capital investment brings an added advantage of increasing the engagement and productivity of our clinical teams.

And over the past few years, we've consciously invested in 3 key areas. Firstly, we've improved our practice property and facilities through refurbishments and in some cases, relocations. Back in November 2022, we held a Capital Markets Day, in which we shared the bell curve distribution of our practice margins. And we said that this was closely correlated with the quality of the practices. And we've invested over the past 4 years to improve the average quality of our practices, and this brings increased capacity and the ability to provide better clinical care.

Secondly, we've invested in our clinical equipment to drive revenues and margins. And as Chief Veterinary Officer, I can clearly see the clinical benefits from investing in new kit. However, I must stress that we only invest where we believe that financial returns merit it. We don't invest in shiny new clinical equipment simply to help engage our clinicians. And I'd expect all of my clinical colleagues to fully understand that the investment is only possible where expected financial returns support it.

Thirdly, we've consciously invested in our IT and technology. This includes our new cloud-based practice management system, but we've also invested in our websites and our client experience. I'll expand on each of these 3 areas shortly. Before I do, I also need to explain that there's a certain level of maintenance capital expenditure, which we have to incur. This is the minimum investment that we're committed to in order to maintain our existing facilities, and we expect this to be circa GBP 12 million per annum.

Any capital investment in excess of this is a conscious investment decision. And although I recognize that some growth capital expenditure may also bring a maintenance benefit. At the November '22 Capital Markets Day, we set out guidance that our annual capital expenditure, including this essential maintenance CapEx was likely to be between GBP 30 million to GBP 50 million per annum. This was due to the portfolio of practices that we've inherited, and we have made really good progress in improving our facilities over the past few years.

We now expect that capital investment to be no greater than GBP 30 million over the coming years with each individual investment needing to generate sufficient returns. So I'll now discuss each of these investment areas in turn, starting with investment in facilities. This investment in our practice sites has been targeted with priority given to those sites that we believe have growth opportunities and where improving the client front-of-house experience and expanding our clinical capability will lead to good financial returns. We consciously invested in a limited number of property refurbishments and relocations as a result of this.

More recently, we focused on improving a larger number of sites through modest investment at each. And as shown in the chart on the top right of this slide, I'm pleased to report that we've seen an improvement in the RAG rating of our practices from this investment. Importantly, the chart below shows that we've also seen an improvement in our client Net Promoter Score.

Whether for property investment or other growth CapEx, our approach to assessing capital expenditure is similar to that for acquisitions, which Robin explained earlier. Our operational teams will consider opportunities for investment and where considered appropriate and where the expected financial returns are considered attractive by finance business partners, these opportunities are worked up into capital expenditure business cases.

These business cases would include an overview of the proposed investment, the upfront capital expenditure and any ongoing operational costs or savings as a result, the revenue and margin upside expected, the implementation plan and timing, detailed financials showing the upfront and any ongoing investment, the revenue and margin upside, resulting cash flow -- projected cash flows, net of taxation, the overall payback period, IRR, ROCE and return on invested capital and business cases for capital investment above GBP 100,000 are presented to the capital expenditure committee, which comprises myself, Richard and Robin, the CEO and CFO, respectively, and the relevant operational property, IT and finance team members.

Any approved capital projects are then allocated a CapEx number so that investment and returns can be appropriately tracked. We also then undertake post-investment appraisal, which Robin will discuss later. So this is an example of one of our property relocations, Maison Dieu. It's a practice in Dover in the southeast of the U.K. We previously operated this from a former residential property. We saw a really good growth opportunity in the area and invested circa GBP 1 million in relocating it to a new facility with 2 additional consulting rooms and an additional operating theater, which we opened 2 years ago.

We've seen a steady growth in revenue and gross margin in that period and notwithstanding increased employment costs, EBITDA has increased. This investment is expected to have a 10-year payback period and to generate an internal rate of return of 14% and a 3- to 5-year return on capital employed of between 13% and 17%.

And another example of a practice relocation is Ruddington, a practice in Nottingham in the center of the U.K., which again was housed in a former residential property with limited parking. We invested just under GBP 1 million in relocating this practice to a facility -- a new facility, which opened in the winter of 2022. Again, we expanded the capacity of the practice through adding 2 consulting rooms and an additional operating theater.

And as for Maison Dieu, we saw an increase in both revenue and EBITDA post the investment, and we expect a 7-year payback for this investment with an internal rate of return of 21% and a 3- to 5-year return on capital employed of up to 39%. Both of these relocations have delivered enhanced revenue and EBITDA. And given the challenges that we faced in the past 3 years through the CMA process, weaker consumer confidence and significant inflationary pressures and the global macroeconomic and political uncertainty, these returns may not be as strong today as we forecast, but they are still expected to be accretive.

Thanks, Paul. So this chart is similar to the one I shared earlier on acquisitions. The vertical axis on the chart, again, is return on capital employed and the horizontal axis, again, is time in years. And the line on the chart represents what return on capital employed would be over time based on a conservative IRR of 15% for CapEx, which again is above our weighted average cost of capital.

And again, you can see ROCE starts off low and increases over time. And again, the bars represent the return on capital performance for CapEx investments in that cohort, and we pick out renovations and relocations. So the first bar is the return on capital employed performance for capital investments we have benefited from for 1 year, so capital investments made in 2025.

The final bar represents the return on capital employed performance for capital investments we have benefited from for 5 years from capital investments made in 2021. When we expand facilities, it can take time for us to grow our customer list and realize the full value. However, we do see a gradual improvement in revenue and EBITDA over time, and we typically expect an IRR of greater than 15%.

The second focus of our investment CapEx is clinical equipment to drive improved client service and patient outcomes, which in turn drives enhanced revenue and EBITDA. The 2 examples are dental X-ray machines and CT scanners. Back in 2021, we had 82 practices with dental x-ray machines, and these are really important in enabling vets to provide a full range of dental services, which are increasingly demanded by clients.

Through investing in more dental x-ray machines, we have more than doubled our revenues from dental procedures. And as Ben flagged earlier, we still have some way to go before we achieve the preventative dental revenues, which are being generated by our Australia practices. And we've almost doubled the number of CT machines across our practice estate.

As a specialist myself in Internal Medicine, I recognize the importance of highly detailed cross-sectional 3-dimensional images and clearer images than can be obtained from X-ray alone. I personally could not provide my specialist services without one of these. However, these are more expensive pieces of equipment, and it would never be appropriate for each first opinion practice to have their own CT.

However, we have installed CT machines in selected practices where they're performing more advanced clinical work and where their use can be shared by other practices in the region. And this has led to an almost 50% increase in imaging revenue to date. Across all of our investments in clinical equipment, we've generated good returns with payback averaging 5 years, an internal rate of return of over 20% and a return on capital employed of over 30% by year 3.

The third area of our capital investment is in technology. As a vet, I'm proud of the profession and the clinical care that my fellow clinicians consistently provide to the animals under our care. And we've always put animals first, and we've seen ourselves as a service for them. However, I recognize that we may not always have focused on the service that accompanies that for the client.

As Chief Veterinary Officer, I'm encouraging all of our clinical teams to focus on providing contextualized care to our clients and their animals, so the needs of all parties are properly reflected in the choices presented to our clients and the care that we ultimately provide to their animals. As part of this enhanced client focus, we are consciously investing in our technology to improve the ease in which our customers can engage with us.

And this is expected to drive both enhanced customer experience as well as efficiency savings for CVS. Our cloud-based practice management system is the foundation for this and all our U.K. vets working in our companion animal practices and referral hospitals have access to all clinical records of every pet under our care. This brings a significant benefit. For example, again, as a specialist vet, for any CVS client whose animal is referred to me, I can see the full clinical history.

I no longer have to rely on the first opinion practice e-mailing records or in the case of an emergency, the client having to provide their own version. This undoubtedly leads to improved patient outcomes. And the cloud-based nature of this system and the open API interfaces mean that we're now able to add additional features to drive a better client experience.

We launched online booking across all our U.K. companion animal practices over a year ago, and we've been trialing an AI scribing tool to enhance the client experience and also to improve efficiency for our vets. We've got a number of features, additional features in development or trial, including the ability for 2-way client conversations via an app. And our aim is for all clients to be able to access our services and to receive reminders via their phones, including the ability to pay for services.

And on the subject of phones, as a CVS vet, I already have access to, if I can find it, a range of clinical services, resources, and information at the tap of a button, and maybe I'll show you this later on, but we provide our colleagues with an app called MiGuide, which provides them access to all of the clinical guidelines at the click of a button.

I genuinely believe that our vets have the best training development and clinical support of any in the profession. And I'm confident that the investment that we have made over the past few years positions CVS incredibly well for future growth. I look forward to sharing further details in future updates. But for now, I'll hand back to Robin.

Thanks, Paul. So one key area of focus has been improving the look and feel of our online retail business, Animed Direct. Whilst our previous website was functional, we recognize that the user experience fell short of expectations, and hence, we have consciously invested in the new website and functionality. So this chart depicts my own recent buying journey on Animed Direct. At the start of the journey, I landed on our new refreshed website.

It's quicker, it's more secure than our old one, and we know that a quicker website drives higher conversion rates. We've also improved our taxonomy and search. So I was able to find the product I wanted quickly. And when trying to place a product in the basket, I was clearly offered a Subscribe & Go option. What we do know is that if someone is coming to buy pet food, they will need another bag of pet food in the future.

Subscribe & Go makes up a relatively small part of our revenue, and there is potential for significant growth in repeat orders. I decided I only wanted one bag of pet food. And when I placed my product in the basket, I was offered relevant cross-sell options, which was not always the case. So that was good. I then went to checkout, and I was offered a guest checkout option.

This option has only recently launched, where previously you would have had to either register or remember your log-in details, both of which are potential barriers to completion. Guest checkout clearly will not be available for prescription medicines because we need to have details of the pet and sites of the prescription in order to dispense. In the checkout, for an additional fee, I was offered next-day delivery, which was only introduced in the last month.

Our distribution center in Diss is now operating 7 days a week at minimal incremental cost. And then when I went to pay, I was offered Apple Pay and Google Pay, which were new payment options, which made it incredibly easy for me to transact. And hey, presto, the next day, I had a bag of pet food delivered to my door for very little effort. These enhancements have helped significantly improve the performance of Animed Direct in the second half of the financial year just gone, and I look forward to sharing further details of this in our annual report, and there is still more to come.

To summarize, this slide highlights group return on capital employed over the past 8 years. There's clearly been some factors that put pressure on ROCE over this period. In the latter years, we've seen weaker like-for-like, high inflation, but also the initial dilutive impact of CapEx and acquisitions. That said, given the characteristics of the market we operate in and the characteristics of the growth opportunities we have, I'd expect ROCE to gradually improve over time. I'll now hand back to Richard for some closing remarks.

Thank you, Robin. The investments which Robin, Ben, and Paul have discussed position CVS well for future growth. CVS has consistently delivered like-for-like growth of 6% through economic cycles, and margins have been maintained despite the inflationary pressures we have seen in recent years. We have an opportunity to enhance margins further through acquisitions and the scale advantages which flow from them.

We have a healthy balance sheet, and we benefit from high operating cash conversion from our predictable and recurring revenue streams. Our ability to deliver compound returns through acquisitions is evident through our recent growth in Australia and selective investment in facilities, equipment, and technology can enhance those returns through supporting inorganic growth.

And the returns from this investment are enhanced over time, and we are targeting high teens returns on all capital employed. And our balance sheet strength and cash generation mean that we have options under our clear capital allocation priorities. The attractiveness of each option is clearly somewhat dependent on our prevailing share price. And I hope we see a re-rating of our valuation over time.

I would like to close this presentation with a brief recap. We operate in a large and attractive veterinary market, which has strong fundamentals and where I expect AI to be an enabler to improve operational margins over time. There will ultimately always be a need for vets to physically examine and treat animals. And hence, I do not see a significant threat from AI. We have delivered consistent growth across a number of periods. EBITDA margins have been maintained despite inflationary headwinds.

We have a disciplined approach to capital allocation, a healthy balance sheet and capital to deploy, and we have a history of delivering accretive returns. Our target addressable markets in the U.K. and Australia are large, and we are confident in our ability to generate accretive returns from further acquisitions. We have strengthened our operations and have built a platform for growth. And we have all the characteristics of a growth compounder.

Our valuation remains significantly below pre-CMA levels, and I firmly believe now is a great time to invest in this sector and in CVS. Thank you. So I'd now like to open this session to analyst questions. And feel free to take Paul up on his offer earlier and challenge him to think of an obscure breed and test his clinical knowledge. But if I could ask my colleagues to come back on stage, and we'll open the session for analyst questions.

Charles?

Thanks, Richard. Lots to get through there. Thanks for that info. I think the standout for me was the scale of opportunity in Australia, which looks a lot bigger than we've discussed in the past. Do you want to just talk through why the scope of the increase has been so great? Is that because you expect to make more acquisitions? Or you think that the like-for-like growth will be higher or percentages will be higher or a combination of all of those?

Yes. I think it's a combination of all. We are very pleased with our entry, delighted to have Ben on board as well and leading our operations in Australia. We've seen good performance from the practices we've acquired, but we have been selective as we talked through earlier. We, as Robin said, have turned away more deals than we've gone ahead with. And a number of those smaller deals or those practices with facilities that just need some improvement.

We are in dialogue still with those potential vendors, and we expect some of those will return to us as opportunities. I also think as we build more scale in the regions we are already operating in, that allows us to kind of add bolt-on acquisitions that make more sense once we've got scales in operating regions.

The market is significant, and we are at an early stage of consolidation. And I think, Ben, you described it as probably a bit like the U.K. market maybe 10 years ago. So there's plenty of opportunity for growth. And maybe you can touch on the opportunity for synergies and what we're seeing already and also the like-for-like growth we're achieving.

Yes. So from a like-for-like position, we're actually really pleased with what we're seeing. A lot of that like-for-like growth is actually coming from the disciplined acquisition approach that we are taking. Now I spoke around clinical depth really drives growth and revenue growth. And because we've been disciplined in that acquisition and the types of clinics that we have been acquiring, it has been a really, really positive trend from a like-to-like position.

I think not only that, the Australian economy is reasonably resilient. And I think that it's the 2 bases. The first is we have one of the largest pension funds in the world, and that is used as a vehicle to stimulate the economy. Second to that is that our mining and minerals aspect is also quite supportive. So we do -- we're not immune to, obviously, the global macroeconomic conditions, but we do find that we are somewhat more resilient.

I think from a synergies perspective that Richard spoke about, that's only going to get greater as we continue to add acquisitional growth in. I touched on the gross margin aspect earlier where we see that more and more acquisitional growth that we are having with local suppliers, the heavier or the larger the leverage capability that we have to gain more synergies and better buying power within those aspects.

Equally, just from an employment position and a support office position, we have the likes of our IT functions as well as areas such as accounts payable, if you will, where it does not make sense to have local delivery when we can leverage a lot of our U.K. colleagues and the functions that are already built.

The size of the opportunity has always been there. I think we have increasing confidence given our experience of both the acquisitions, the process and the post-investment analysis that we've carried out. It makes it a bit easier for us to then quantify the size of the opportunity. But the opportunity -- I mean, it's one of the reasons why we entered that market because there was a large opportunity for us to potentially benefit from.

And that like-for-like growth that you're still targeting of 4% to 8%, where would Australia fit into that target then?

Australia is performing well. We haven't actually given a like-for-like number for Australia, but it's performing well.

And Robin, the -- you talked about buying the practice at roughly 6x EBITDA. I think we've previously talked about 6x to 8x. Can you just be clear, is that including the contingency consideration?

So the multiple ranges probably just under 6x up to close to 7x over 3 years. But on average, it's a 6x EBITDA multiple. So it starts off slightly lower as you have the deferred contingent consideration that you referred to that we pay typically over 2 years. And just as a reminder for everyone, we value Australia acquisitions. We have a valuation for the enterprise value. We then pay 80%, often as 80 -- 70% to 80% upfront and then we defer a proportion over a period of time.

For us, that's important because it's a good retention tool for the vendor. It allows us to establish ourselves within the practice. And also, we hope that the vendors will stay, but if they don't, it allows us to manage succession. So it's an important part of how we acquire practices. So 20%, 30% deferred. And if they hit certain profitability gateways, then that deferred gets paid out. If they don't, it doesn't get paid out. So it starts off at 6x as an average over the 3 years, including the deferred.

And has that come down? Or you just got a larger number of contributors to that?

I think it will depend on the type of practice that we acquire. I think when we initially entered the Australian market, we purposely focused on the really premium assets. And we probably, given that we were new to the market, had to pay slightly higher multiples. I think as we establish our reputation in Australia, we have seen some improvement in terms of what we need to pay from a valuation's perspective. Having said that, for strategically important assets, the multiple may be slightly higher, but it has slowly improved over time.

One last question. Could you just comment about competition for acquisitions in Australia?

Yes. And Ben, please expand. We knew when we entered the market, there were 2 established large consolidators, a company called VetPartners, Ben knows very well, having worked there, currently owned by EQT, previously owned by JAB Holding. They're the largest consolidator in Australia with just -- well, about 270 perhaps I believe. They -- under new ownership, I think EQT acquired them in the last 18 months.

They are acquisitive, more focused on New Zealand at the moment than Australia, but we expect them to provide some competition for assets. The other large established consolidator is Greencross, currently owned by TPG. You may have seen there were rumors that TPG were going to sell to Coles. That sale, I feel -- I understand it fell through at the weekend. They have about 170, 180 sites. And then Ben, there's 1 or 2 smaller consolidators in Australia, such as Vets Central.

Yes, that's correct. So Vets Central is supported by Pemba Capital. It is a smaller fund and has been focused on assets that are really more regional based as opposed to metro based. So from a competitive tension positioning, I think our reputation from being from -- in the U.K. and having such a large footprint in the U.K., we actually have vendors seeking us out. And when it comes to a competitive tension position, there are cultural elements that our vendors actually choose us over our competitors because of the way in which we go about how we operate and the clinical offering that we do support.

Charles, you have your hand up.

Charles Weston from RBC. A couple of questions from me, please. First of all, I appreciate this has been quite high level and strategic. But if I can have one question on the trading statement. The net debt number of GBP 199 million, I think it was, seems a little bit higher than I could figure out from the acquisitions and the buybacks and obviously, the EBITDA and the cash conversion. So I was just wondering if there have been any one-offs or working capital changes perhaps in the second half?

When I think about net debt for the year, we have delivered operating cash conversion of around just over 70%. We have seen an uptick in interest. I mean we have carried a higher net debt through the year. So our interest payments are slightly higher. And we have seen an uptick in our tax payments as well. Outside of that will be the -- well, it will be the investment -- CapEx investment, acquisition investment.

We do have some exceptional costs that have gone through the P&L, largely in relation to the CMA and largely in relation to some of the CMA remedies. There will be an element within our cash flow relating to the deferred consideration that the other Charles just mentioned earlier. So that will come out. And then obviously, we've had our share buyback, which we completed a GBP 20 million share buyback that step-up, and then we announced a further GBP 50 million. So during the year, we've had a share buyback of over GBP 30 million.

Okay. Second question, it would be great to get an understanding of your expectation of, kind of, self-help contribution to like-for-likes versus consumer. You painted a picture where I think from -- I don't know, in 2027 or from 2027, there would be this sort of aim to get back to the 4% to 8% level. But clearly, you can't call consumer confidence return. So how much can you generate yourself, self-help investments, et cetera, organically like-for-like versus relying on the consumer to step back up?

Yes. And Charles, that's exactly how we're looking at things because as you say, we can't control the consumer confidence. We can't control the economic outlook, but we can influence things within our business. We are very focused on providing great clinical care but also recognize the need to be offering an improved client service and helping clients engage with us in a much more digital and frictionless way.

We launched online booking just over a year ago across all of our U.K. companion animal practices. We have a common practice management system now, which is cloud-based, and that gives us a richness of data. And maybe Paul can talk about some of the data analysis we can do and segmentation we can now do. We are improving our marketing. We now have a joint brand across all of our U.K. practices.

I guess that was somewhat forced upon us by the CMA process, but actually it does bring benefits to us because we now have CVS Vets plastered outside of the majority now of all of our U.K. animal practices and every one of our practices will be jointly branded, well, within a few weeks now. And that brings benefits because we now have a national brand. We can now do central marketing. We can do central CRM and drive kind of footfall back into practice ourselves.

Pricing is also another factor, clearly. And as we've said previously, we have been more cautious on price changes over the past 3 years. Now we have CMA certainty. We have put price changes through this summer. We're not going to give you the number, but we have put higher prices through than we have done in the previous 3 years. But maybe, Paul, you can talk about some of the data capability we now have and the richness of data.

Maybe before I do that, I think probably just to come back to your question around the self-help. It's an oversimplification to consider preventative health care to be discretionary and health care providers in illness and injury to be fully nondiscretionary. There is certainly preventative health care that would be considered to be discretionary and there is an element of that work that we need to do to improve footfall around those discretionary spending.

When a pet is ill or injured, much of the decisions that pet owners make, those discretionary decisions about whether to fix a fracture or to amputate, the examples I think I have given to lots of you in the past are based upon the confidence that we can give our clients about the outcomes, the quality of the work that we can do and the value that, that brings. And much of that is around communication rather than necessarily just price.

And so there's a lot of work that we're currently doing about building our colleagues' confidence in how to communicate that. That's the contextualized care element. So there is -- just to sort of remind that there is -- when a pet is ill or injured, there is discretionary spend within that. And there's a lot we can do around improving that average transaction value, for example, through how our colleagues communicate and how we -- and the services that we can provide.

And then in the background, now that we have Provet and we have all of that wealth of data, we can see, for example, the types of diseases that appear at certain ages in certain breeds, and we can start doing targeted marketing to clients who own a 10-year-old labrador or an age of -- we talk about those breeds we talked about earlier on. At what point would I want to definitely see a Cavalier King Charles Spaniel to do a cardiac check.

I should be ideally reminding them that this would be maybe the most common time for a mitral valve disease to appear. And therefore, we'd want to see the physical examination, listen to the heart, and for a certain percentage of those, we're going to identify evidence of heart disease. And that drug I mentioned earlier on, pimobendan is a life-extending drug.

So actually, it's a great opportunity to provide our clients with that. So I think the Provet provides us with much better access and ability to do targeted marketing, but also to provide clients with the opportunity to extend the health and welfare of their pet and live longer and healthier lives. And our clients love that and our colleagues love that opportunity as well.

And Ben mentioned earlier the extent of preventive dentistry that happens in Australia, and that's definitely something we are trying to learn from here in the U.K. and encouraging our colleagues to have -- well, to develop the skills to be able to provide that, but also hopefully then driving further footfall for more preventative dentistry for animals.

I can just add one additional comment. So I think Richard did -- he mentioned the fact we want to be more visible digitally, so it's increased marketing. I think some of the data is how do we use our data to also engage with clients that we do have to remind them of the value of visiting a vet practice and how do we encourage footfall. I think Paul also mentioned earlier that we launched our Healthy Pet Club Advanced product. So we've talked in the past about Healthy Pet Club preventative health care scheme.

It's annual, pay monthly. You have your half-yearly checkups, vaccinations, flea and worming. But we've also recently launched Healthy Pet Club Advanced, which has been quite popular in that, that also includes unlimited consultations for those clients. And what we've seen is that if clients come in and they want to come in, they want cover for their animals and vets have hands on pets, then invariably, they'll have to diagnose issues and address them earlier. And I think that is another area where we will drive further footfall and revenue growth.

James Bayliss from Berenberg. Two questions, I think. You made comments about temporarily exceeding the 2x net debt-EBITDA leverage ceiling for attractive acquisitions. Not necessarily looking for numbers here, but given the nature of your presentation, everything looks relatively attractive in the first place. So is that a comment that you would be looking to see even more attractive attributes? Or is it more about where there's a certain kind of scale or geography? Or how do we think about that?

I guess what we recognize is we can't control the decision point when a vendor decides to sell. And therefore, acquisitions are sometimes like buses, three come along at once, et cetera. We are very confident in the ability to grow through acquisitions in Australia. We're also confident we will return to U.K. acquisitions at sensible multiples and Robin did talk about the multiples we might be willing to pay in the U.K., clearly linked to our own share price.

So that comment was -- and also, we know that we delever quickly when we stop investing because we generate cash and we have good levels of operating cash conversion. So if in the short term, we had a number of deals coming along at once, we can see ourselves taking leverage slightly above 2x but knowing we will delever quite quickly. So that's what that point was about.

I think given our strong operating cash conversion, our expectations around capital investment, acquisition investment, we will -- and given our current share buyback program, we may see leverage increase up to 2x. We're not currently expecting it to exceed 2x. I think really, it's just a nod to flexibility. If something then happened that was super accretive that we were keen to do, then we just wanted to mention we are flexible in our approach.

And then the second question, if you look at everything you've shown on returns, Client Promoter Score, everything looks like it's validating the investments you're making in the facilities, the patient care practices. If we think about the rest of the market perhaps in the U.K. in terms of the capital constraints on the independent practices or even some of the larger guys with more full balance sheets, does that lead us to believe that all this should come together to suggest you take share because you're able to deliver a better experience and modernize and drive growth, I guess, for your growth CapEx more so than others? Or is that potentially quite unfair given we have seen market disruption in the short term?

Yes, it's a good question. And yes, it's a very competitive market in the U.K. We see strong competition in Australia as well. So we have to be delivering a great service to our clients and their animals. And we do pride ourselves on that. We have been competing hard for colleagues as well. And obviously, the need to recruit and retain and develop and train strong clinicians is at the heart of what we do.

So with competition, obviously brings opportunity as well, and we are competing hard for clients, for vets and nurses and we are competing for acquisition opportunities as well, probably less competition just now than we've seen in the past, and we do need to reset seller expectations as to what multiples they can achieve. But we are having conversations. We are hoping to complete some acquisitions this financial year. Nothing concrete at the moment, which is clearly why we haven't disclosed anything, but we will compete hard and continue to do so.

Seb has been very patient. So do you want to come to Seb first?

Thanks, Richard. I knew if I waved my hand enough, I'd get somewhere. Seb Jantet from Panmure Liberum. So just first question, if I can take you back to Slide 14, where you set out the relative sizes of the market. And it always kind of struck me that if you look at the pet population in the U.K., 37 million and Australia is 32 million, it's about a 15% difference. And yet you're saying the veterinary market size in the U.K. is GBP 6.7 billion and the veterinary market in Australia is GBP 3.3 billion. So why is it half the size for only a 15% pet population difference?

Robin, you kick off.

I was just going to say there are -- I mean they are survey data points, and we've included the survey data that we've included on there. I think one of those populations may also include a volume of birds, for example, that we may not count in the other. So I think whilst Australia has a higher pet propensity, and I'm sure Ben will talk about that. It's not quite correlative, I would say, to market size, not fully anyway.

I think my only other comments to that is Australia has one of the most highest pet populations per capita in the world. I was speaking the other day, myself have 3 animals, my next-door neighbor has 2. We are very humanized. We bring our pets into our families as humanization sort of continues. In terms of that specific question from a density, I would echo Robin's comments that you do have quite a variety of pets within Australia, and you have things from exotics, so snakes, birds, et cetera, but there is a high proportion of companion animal in there as well.

Maybe I ask the same question a slightly different way around it. So if I was to go and get my dog castrated in Australia, would it cost me the same, more, or less than it would in the U.K.?

From a price point perspective, I can't comment and maybe Paul is more better placed from a comparative perspective. I think pricing across Australia because of the low consolidation, there isn't consistency across the entire market. We are a vast country, and you don't see quite probably the levels of consistency from a pricing position, but I'll let Paul comment from a...

It's hard from a like-for-like perspective in terms of the different charges. But if you look at things like consultation fees and neutering fees, then I would say, yes, potentially a very mildly above in Australia than compared to the U.K., but it's pretty evenly spread, I would say.

And I guess kind of interesting to hear that you're saying the ACCC is kind of getting more involved in the market in Australia. So I'm wondering to what extent you're taking some of the learnings from the CMA report and preemptively applying them in Australia to make sure to see off at the pass the ACCC out there.

Yes, we absolutely don't want to create a competition issue downstream in Australia. Clearly, with 57 practice sites at the moment, it would be slightly odd if we did have a competition problem. We absolutely don't. And we have, as Robin said, engaged with the ACCC on the odd occasion where we're buying a practice in Sydney, for instance, that's close to another practice we already own.

We know that the regulators tend to talk to each other globally and the ACCC kind of probably have been watching what the CMA are doing in the U.K. And there is a new regime where once you reach a certain turnover threshold, which we are close to reaching, then more deals would have to be routinely referred to the ACCC. We have had every deal we've spoken to about approved. We are applying the kind of 30% threshold in the U.K. and applying that as a loose framework to Australia.

But we know that deals have been approved in Australia because it is a public process above that level of concentration. So I hope the framework in Australia is more generous than the U.K. and maybe the U.K. framework, the criteria does kind of loosen in due course. But we are -- as part of our discipline, I guess, we're also being disciplined in terms of that approach as well.

Sorry, just very quickly. I just want to be clear, the ACCC aren't taking a greater interest in veterinary. It's the whole -- the regulation for the ACCC in terms of any mergers and acquisitions across any industry has changed from the 1st of January. And the reason why I mentioned that we will need to engage with ACCC more regularly is because of our size.

Once you reach a certain threshold, it then just becomes mandatory, whether it's veterinary, whether it's dentistry, whether it's any other industry. After -- when you have revenues of a certain size and you're acquisitive, you'll have to approach the ACCC. But as Richard said, we've been through the process. We've had every single offer or every single engagement signed off by the ACCC. We know it. We're comfortable with it. It's just another hurdle.

And last question then just on the U.K. So you mentioned you've increased your prices. I guess the benefit of the CMA ruling is now you can see what others are doing to their prices as well. So have you seen similar price increases going through from your -- the other kind of LGVs? And what about the independents? There's definitely been some evidence that they are closing the gap versus kind of the LGVs. Are you -- is your data showing that as well?

Yes. And as you say, now that more companies are having to publish their data, and this is gradual. Not everyone has published their pricing yet, and that obviously will -- that volume of price information will kind of increase further from here as everyone has to meet the CMA deadline. But not everyone is publishing at the moment. And I know you've done your own price scraping and looked at how independent practices have increased prices.

And the CMA has effectively given the information to do so. So the CMA process clearly may lead to higher cost for consumers. We have certainly put some price changes through this summer and other veterinary groups, we know we are also doing that, and other independent practices are also increasing prices. So Paul, I don't know if there's anything you'd add in terms of information you see on the kind of local level.

I think that's correct. And I think the main -- the key is that there is no obligation at the moment to put those prices on. Some have, some haven't, particularly across the independent practices, many are waiting until such time is enforced for them. And that's based on the CMA remedies that they have a 3-month longer window in which to publish their prices, and I'm sure they'll be keeping a close eye on things.

Kane, I know you had your hand up, so we'll go to you next and then Andrew.

Kane Slutzkin, Deutsche. Just coming back to the 2x question on the leverage. I noticed in the presser, you mentioned New Zealand. Is that just a sort of natural extension of Australia? Or is there sort of greater ambition to kind of keep going geographically?

Ben, you might want to explain how Australians think of that market.

Yes. I'll say it tongue in cheek. It's just another state of Australia, right? No, in all seriousness, it's a natural extension of Australia in terms of market. There is a lot of synergies that can be seen by entering that market when the time permits and when it makes sense. If you look at it from a regulatory and legislation basis, there is a significant amount of employment legislation and other regulatory legislation that is modeled off the Australian base for New Zealand.

So a lot of health care businesses, a lot of businesses within Australia and New Zealand actually crossed the Tasman to be able to continue to operate because it does make sense. I will also add from an Eastern state basis, it's quicker to get to New Zealand than it is to get to the other side of Australia. So from an operational execution and ability to manage those practices, it does make sense if and when.

Just Slide 6, looking at the 4% to 8% chart you've got here, I'm just sort of confirming, is that now we're reset, we're coming back to that target is official because you kind of had it out there. Is this from '27? Or how do we -- is that how we should think about it?

We've had a Capital Markets Day back in November '22. We've referenced some of that and some of the material today. Our ambition is absolutely to get back to that level of growth. We're not there yet. And the current economic backdrop is clearly quite challenging. And therefore, we can't say we'll be back at that 6% level in the next -- in this current financial year. But we have seen higher price changes this summer. There is an element of self-help. We've seen Australia improve its performance.

We've seen Animed Direct grow in the second half of the past financial year, and we're confident with some of the changes that Robin mentioned that we can see further growth this coming year. So -- and we have a consensus for this current year, which we are comfortable with, which also implies higher like-for-like growth than we achieved last year. None of that is easy, and we're not giving a forecast, but we are confident in our ability to return to that level.

I'm sorry to nitpick, but on that same slide, you say 19% to 23% margins. Is that slightly different to will be 19% to 23%? Are you actually -- is that the plan?

We said in the Capital Markets Day in 2022 that we expected margins to gradually improve from 19% to 23%. We delivered 20% in the previous year, 20% roughly this past year. And that's against inflationary pressures that we weren't really expecting back in November '22. We've obviously seen the national insurance increases. We've seen utilities cost increase because of various conflicts.

And we've seen significant salary inflation from national minimum wage and national living wage increases. And if it wasn't for those inflationary pressures, we would already be delivering margins in excess of the 20% level. Australia is margin accretive given the acquisitions we're acquiring. Our laboratory business is margin accretive.

We have sold the crematoria business since that Capital Markets Day, and the crematoria business did deliver 30%-plus EBITDA margins. And we are growing online retail, which is obviously less than 10% margin. So there's a mix of element as well. But we are working hard to maintain margins in the current pressures. And clearly, with increased like-for-like growth, we would hope margins will also improve.

Sorry, just one last one, sorry, Andrew. Just on the labs in the U.K., could you just talk to us how pivotal they are in sort of the framework of the practices? I know, obviously, last year, I wrote about this, if you recall, I just wanted to double check again see if anything has changed there. Is it something you would be looking to potentially kind of offload at some point in terms of raising some significant firepower to perhaps head to Oz?

Yes. Our laboratory business are integrated to our practices, and I'll get Paul to expand on that in a second. But we also provide our services to other practices in the U.K. We've seen growth in our laboratory business this past year, both in the volumes and ATVs they're achieving from our own practices, but also growth in the number of third-party practices we serve and also the revenues and volumes that we're driving through. And I think that comes back to partly the resilience of the sector.

Clearly, we have been impacted by the economic backdrop, and we saw weaker like-for-like growth in the final quarter. But when animals get ill or injured, clients invariably want to treat them and invariably want to spend money to get them better. And most of our lab work and test and analysis, I guess, is done for those ill or injured animals. So that correlates with strong demand in that sense, but we recognize there's weaker demand in some of the more preventative, more discretionary areas. But Paul, maybe you can just touch on the integration and how, I guess, you benefit as a clinician from...

I think it's probably worth looking at 2 different parts. One is our in-house laboratory analyzers and then the other is the reference laboratory. So one being tests that are run in-house in the practice by analyzers that we provide. The importance of that is it provided internally, it gives confidence they've been through the right governance process. They can rely upon the results, and they know they're going to get the adequate support.

And we do provide really, really high-quality analyzers for them on biochemistry, hematology, for example. So that really increases our ability to deal with particularly emergency cases. And then the other part is the reference laboratory, which is where samples will be sent externally. Unlike the crem, there is a clinical provision element within the laboratory.

So we have a number of clinicians working in the laboratories, which provide advice to our colleagues around outcomes of those results. So it's a much more integrated part of the business and certainly provides lots of support around our R&D, antimicrobial stewardship, for example. So it's certainly beneficial from our colleagues' perspective.

It's Andrew from Investec. Two questions, please. Just one on market and one on yourselves. If I could take Paul back to Poppy the Cavapoo, the graph that you showed is the scale on the y-axis, is that to scale? Because if you look at it sort of the cost associated with the neutering versus some of those treatments you mentioned at the end of life, I will guess there is -- it's much more expensive at the end of life. Is that the right way to think? Or bear in mind, we've got a pandemic bolus coming through, how should we think about spending on the dogs that are coming or the animals that are coming through?

Yeah, I think Robin is itching to jump in.

I'm hoping it said illustrative on that slide, given that I pulled it together. So it's meant to be illustrative, Andrew. So you're right.

It's illustrative because, I mean, even if you take that cardiac case, it depends upon what happens. Might get a lucky cavvy, gets a heart murmur, and dies from a condition at 14 years old, completely unrelated to its cardiac disease never goes into heart failure. So I think the key is to say that, the curve rather than the bar chart would be your average. you take the average; it will look approximately like that.

Some dogs will get away without any additional spend in their senior years at all if they're super healthy. And some will be spending a very significant portion in their first 2 or 3 years, particularly if they have a fracture or have an immune-mediated disease, which commonly affects younger dogs. So very much illustrative.

But it gives you a bit of a perspective around, for example, that dog might have had, as I say, x-rays, lifelong medication on certain occasions and a number of hospitalization events. But it could have been more unlucky than that and needed to have a heart valve replacement, which, by the way, we also do over at Bristol Vet Specialists these days.

It's sort of a mixed thing because most animals will go through a neutering thing. But at the end of the life, there may be some animals that have those. So that scale is probably -- it looked like it was double. That might not be wildly out of kilter. Is that one way to think?

Because it will be probability adjusted, but yes, not wildly.

And then the other one is just on the IRR associated with the CapEx options that you've got. It's clearly different IRRs available. But you -- I'm assuming you can't neglect one bucket, right, in order to make the business work for the longer term. So how much flex have you got in deciding where to put your cash, right? Is it entirely discretionary and you can sort of completely step back from investing in practices and go and do more acquisitions or you've always got to invest some in the practices. Is that a consideration that you think about?

I think as we said, we have a level of maintenance CapEx that, frankly, we have to do. And we think that's been growing slightly, but around about GBP 12 million per annum. The rest is, in essence, discretionary, and that could be across those kind of 3 areas. Technology investment tends to be lower than property investment by its very nature. But there will, I think, still be a need for some tech investment, even though we've got a strong platform.

We recognize to provide a better client service; we need to invest a bit more to improve that proposition. Practice facilities, we're through the worst of that investment. We've improved, as Paul said and showed that chart, the average quality of our estate is much improved now than where it was. Still some outliers, and we'd like to improve some of those further sites, but we don't need to rush to do that now.

And so there is quite a lot of discretion and choice, and we're in a good position, I guess. We've got a business that's got a strong balance sheet, capital to deploy, and there are options. And I think as Robin said, those options, including returning cash to shareholders, need to be evaluated at any point in time, and we'll choose the most accretive ones.

Sahill?

Most of my questions have been asked, but just 2 from me. Coming back to Australia, it'd be interesting to get a bit more color around the buying synergies that you referenced in the RNS today and the mileage, the opportunity going forward is my first question. I'll probably deal with that first.

And I guess the obvious synergies that come with increased scale of buying synergies, in the U.K., we've obviously accessed those for a number of years. And the way we've gone about that is we tend to buy drugs from a chosen wholesaler. So we concentrate our spend with one wholesaler. And then we also have clinically led. So Paul's team decide from a clinical sense which are the drugs we should be using because there's choice in many procedures.

So we have what we call a dedicated and preferred drug list, which means we concentrate our buying power with a reduced number of drugs that we recommend our practices use from a clinical sense and then we go into that commercially. So we work to what we call net-net prices, and they are net of the wholesaler discount and obviously, volume helps negotiate those discounts and net of the rebate we then negotiate from the manufacturer.

When we entered Australia, the practices we started acquiring, were using probably 1 of 2 major wholesalers, a company called Lyppard and a company called Provet that was owned by Covetrus. We got our clinicians together. So this is before Ben arrived, but we got our clinicians together at the time.

And Paul took them on a journey with our procurement team in them, deciding collectively which wholesaler they would prefer us to consolidate with because we said to them all, they've all got financial skin in the game. It makes sense for us to have one preferred nationwide wholesaler, and they chose Lyppard. So we are now buying our drugs in Australia from Lyppard.

And that means we are negotiating improved discounts based on the volume. And as those volumes grow, our ability to negotiate obviously improves. From a manufacturer sense, we're buying drugs in Australia from the same manufacturers we are in the U.K. There are other global manufacturers like MSD and Elanco and all the others. And initially, we've had resistance from local Australia MDs not wanting to give us volume rebates because they didn't really care what we're buying in the U.K.

We're trying and have, with some success, broken down some of those objections. And we've said to the likes of MSD, we don't care where you give us discount, whether it's more in the U.K. or discount in Australia. We want a better group return and discount for the scale that we're buying from you.

So we've slowly seen some success there. And then we've also clinically thought about, well, okay, we don't have crematory, we don't have laboratories in Australia, but we can use our scale to bring our purchasing power together and have preferred suppliers. And maybe, Paul, you can take the baton and Ben, feel free to add any further.

I'll pass to Ben in a minute because he now sits with the CAC. But one of the early things that we needed to do was to establish our Clinical Advisory Committee. And the reason for that is that our colleagues are very willing to use dedicated suppliers, dedicated products if they have the confidence that they have been assessed from a clinical perspective. And the evidence has been used to ensure that they're not going to be breaching their professional ethical responsibilities in using those. So it's not about breaking autonomy.

They have the choice, but they want the confidence that actually what we're advising them to use doesn't bring them any challenges. And by having a Clinical Advisory Committee that they rely on, that they value and respect, it actually means that they have real confidence that when we say, look, this drug can be on the dedicated and preferred list. They can now go and see how that process has taken place.

They can see who's had the conversation where the advice has been got from. And that does mean that then we see better compliance on our dedicated and preferred. From a laboratory perspective, again, it's down to in-house analyzers, are they going to be able to run the test that they want to be able to run and actually, we have different diseases in the U.K. and Australia.

So it's really important, we get the Australian clinical perspective on that to ensure that actually we're not making choices from the U.K. that don't apply. There are definitely certain things, things that like to bite and kill you in Australia that don't do so in the U.K. that are really important, and that affects even things like antiparasitics. We don't get tick parasites in the U.K., but we do very commonly in parts of Australia. So Ben, your feedback on the CAC.

Yes. There's probably 2 comments I'll make. So from a CAC perspective, it is made up of clinic colleagues. And the longer that group continues to mature, the more effective they become in terms of their own ability to operate and also influence the wider profession and the wider group as we continue to grow.

The second component I would add in is in a lot of cases, when we're acquiring, there are still some contractual obligations from a supplier position, and I'll give you pathology would be one. As soon as that contractual obligation is finished, we're moving into a much better preferred supplier arrangement based upon what the CAC has agreed to. And therefore, we actually see our gross margin improvements continue to grow.

Just one final one for me. So I don't know if this is for you, Richard or Robin, but Slide 19, the ROCE on the U.K. acquisitions for acquisitions made in 3 years or 4 years old are comfortably below your hurdle rate. Is that just a function of the prices you based or the macro? What's going wrong with those 2 cohorts?

Yes. We paid around a 10x EBITDA multiple for those practices, which clearly we wouldn't pay in the current scenario, given where our share price is. They are still relatively early in their journey, and they will improve returns over time. So we're very confident they'll be accretive.

Also though, we have obviously suffered from a CMA process from cost-of-living pressures, and we've seen like-for-like growth in the U.K. weaker, and we've had less pricing power than we probably assumed in the business cases. But we are very confident we will improve those returns, and they will be accretive over time.

Made fewer acquisitions in those cohorts as well. So yes, I'd expect them to improve over time. But as a cohort of acquisition opportunities, they're performing well. And we see good opportunities to enter back into the U.K. market. I think as we said earlier, we expect multiples to come down. We know the U.K. market very well. And -- whilst despite even the macroeconomic environment, we do see potential value in acquisitions in the U.K.

Andrew?

Andrew from Peel Hunt. Just a couple for me, if I can. So care mix has been a pretty important factor for you in both like-for-likes and margins over the last few years. And you mentioned age being important going forward. I wondered if there's any other factors that are important as well as that going forward? I'm thinking whether it be breed preference or clinical capabilities, et cetera, that you're factoring into your numbers?

I don't think we've got any evidence of a significant shift in breed preference that would be impactful on that. I think we do recognize that, that COVID cohort, there was a lot of doodles in there of some sort. And that hybrid vigor does tend to extend life. It doesn't necessarily reduce the incidence of disease, but it might stray out into a later age range. So I think time will tell for that, but I don't think we see a big shift in that.

Some of the shift that we might see coming up in the future is the change in renters' rights, which means that now it's much more -- it's much harder. It's not impossible. It's much harder for a landlord to say no to somebody owning a pet. And so we may well see a shift there. And of course, if that influences the size of the animal that you wish to have, if you live in a flat, a rented flat versus a house, we might see some shifts with that. But overall, no, I don't think so.

And secondly, just on preventative care, you've mentioned that's a bit of a focus in the U.K. going forward, given what you've seen in Australia and how good they are at that. Have you been able to quantify the sort of the uplift on lifetime -- I guess, the lifetime revenue opportunity within an animal, quite crudely. But have you been able to quantify what that uplift could be for yourselves if you're able to...

When we spoke about preventive care in Australia, we were specifically talking about the dental aspect of that. And obviously, much of what we do is preventative and the Healthy Pet Club offering, the regular flea and worming and vaccinations, is all preventive by its nature.

But in Australia, we've certainly learned that practices do a higher proportion of preventive dentistry. Less -- sorry, more complex than human dentistry because clearly, we will sit still and be compliant. For an animal, you have to sedate or in sometimes anesthetize the animal for that procedure to happen. So there's more cost naturally involved.

But I think the Australian vets have become much more confident and clients are much more expecting to be kind of bringing their pets in for preventive dentistry. And we haven't shared the kind of the revenue upside or the margin upside, but it is clearly accretive. And then the delivery of that care is also different potentially and probably allows our nurses in Australia to play a much more active role.

Yes, exactly right. So I spoke earlier around the importance of clinical development, and that doesn't only just relate to vets, but equally relates to nurses and nurses being able to get actively involved in dentistry work is actually a really fulfilling part of their role and actually provides a lot more scope of practice for them, which then has a compound effect of being able to retain better talent and so on and so forth.

I think it's worth probably just bringing in regard to the healthcare -- preventive healthcare, you can focus on individual parts of that, and you could give some estimates. What's really important, if you look at HPCA, so the Healthy Pet Club Advanced, one of the real benefits of that is ensuring that clients feel like they can come to us whenever they need us for advice, and it doesn't incur an additional cost for them.

The Association of Animal Hospitals in America published a few years ago, the frequency with which owners presenting what appears to them to be a healthy senior pet, what percentage of those animals actually have a disease process that requires discussion. And just physical examination history will pick that up in about 60% of senior pets that were presented otherwise assumed to be healthy.

Now that might be arthritis, it might be dental disease. There's a real clear reason that we want to be seeing those otherwise healthy pets to be presented for preventative health care because we will have an opportunity to identify under diagnosed disease. And from our colleagues' perspective, that's excellent for animal welfare.

From our clients' perspective, they get to intervene in the early stages and hopefully delay the onset of disease, but it also does mean that we are the port of call for those owners when they need help. I think that's critical. And that's why the HPCA, I think, is a real benefit for us looking forward.

Thanks, Andrew. Conscious of time, I know we have some investors questions from the call, but we will respond to all of those via e-mail. So thank you for those who have submitted questions. I'd like to finish by thanking you all, first of all, for attending here today and for everyone who's dialed in. And as a recap, I guess, as we've discussed, the sector is very strong. There are some really strong fundamentals.

We are in a good position within the sector. We've got a strong platform. We've got capital to deploy, and we have an excellent team of people. And we have a disciplined approach to capital allocation. We have options. We are getting good returns, and we are confident in improving those returns going forward. We're confident in our ability to grow, and we look forward to sharing further success in due course.

I'd like to finish that, we are a people business, and I'd like to take this opportunity to thank all of our colleagues, some of whom are here today, but thank all our colleagues for everything they do for our clients and their animals and the outstanding care they provide. So I appreciate your support. Thank you. And yes, hopefully, this has been a helpful update. Thank you.

Welcome to this presentation of CVS Group's interim results for the six-month period to December 2025. I'm Richard Fairman, CEO. And later, you will also hear from Robin Alfonso, our Chief Financial Officer; and Paul Higgs, our Chief Veterinary Officer.

Our purpose at CVS is to give the best possible care to as many animals as possible, and I'm pleased to report on continued progress in the period. We completed our step-up from AIM to the main market on the 29th of January 2026, and we hope this will bring benefits from improved liquidity, access to a more diverse pool of capital, index inclusion for March and an increase in our profile as a company.

We have launched our new consumer-facing U.K. companion animal joint brand under CVS Vets, and you will see this reflected in this presentation. Now this reflects the care, value and service, which we are renowned for as a trusted partner for our clients. Our presence in Australia is growing with three acquisitions completed in the period and a further two practice acquisitions completed so far in the second half of the year. We have continued our disciplined capital investment, improving our facilities, clinical equipment and technology, and we are confident this investment will drive long-term growth in shareholder value.

We welcome the launch by DEFRA of a consultation into the outdated Veterinary Surgeons Act from 1966, and we are engaging with that process and encouraging CVS colleagues to do so. And we look forward to the CMA's final decision in the coming weeks. We continue to trade in line with market expectations, and Robin will provide further detail on our financial performance later.

Highlights for the first half include revenue increased by 5.8% in the period with growth across all divisions and like-for-like sales improving. Adjusted EBITDA increased by 3.9% to GBP 67.7 million. We invested GBP 17.5 million in capital expenditure, but maintained leverage at 1.41x. We saw an improvement in both our client Net Promoter Score, which improved to 81.2 and our employee Net Promoter Score to 10.

Having first entered Australia in July 2023, we have grown to 33 practices operating across 55 sites. Our Australia practices are performing well and now present circa 10% of group revenue. We have consciously focused on acquiring larger, high-quality small animal first opinion practices with strong leadership teams, great facilities and excellent reputations. These practices tend to deliver higher margins, and hence, Australia now represents circa 15% of group EBITDA. The Australian market has low levels of consolidation, and we have a strong pipeline and an expectation that we will complete a number of further acquisitions in the remainder of this financial year.

Whilst the level of corporate consolidation is higher in the U.K. at circa 60%, we have less than a 9% market share, and we are confident there will be an opportunity for CVS to make further high-quality acquisitions following the conclusion of the CMA process.

The CMA market investigation has been underway for the past 2.5 years, and we have proactively engaged with the CMA throughout this time. This is to both help the CMA understand the sector and some of the challenges, but importantly, to ensure an appropriate outcome in the best interest of consumers. The CMA announced their provisional decision in October 2025, and this has brought much needed certainty. We do not agree with all of the CMA proposed remedies and feel some such as the proposed price gap on prescription fees are not justified by their findings. However, we are comfortable with them and have already implemented price lists on our practice websites and have commenced the rollout of our new joint branding. We will continue to support the CMA during the remainder of their investigation and look forward to the publication of their final decision scheduled for the coming weeks.

I will now pass over to Robin, who will provide further color on our financial performance in the period.

Thanks, Richard. H1 2026 marked a return to organic like-for-like sales growth as well as growth from acquisitions, cementing a positive first half performance. In May 2025, we sold our crematoria operations and have therefore restated our H1 2025 numbers to reflect these operations as discontinued. Revenue grew 5.8% to GBP 356.9 million, benefiting from acquisitions made in the current and prior year with like-for-like growth of plus 2.7%. Our like-for-like sales growth is adjusted for working days and on a constant currency basis. It excludes current year acquisitions, and it only includes prior year acquisitions from the same month this year as they acquired in the previous year. We are pleased that revenue growth has been achieved across all divisions. This growth was achieved despite continued softer market conditions in the U.K. and a backdrop of lower visit numbers in small animal practices. Client demand for our most advanced referral care remains strong.

Adjusted EBITDA grew 3.9% to GBP 67.7 million, benefiting from increased revenue. An adjusted EBITDA margin of 19% was down 0.3 percentage points versus prior year with cost efficiencies and synergies largely offsetting the increase in National Living and National Minimum Wage alongside increases in employers' national insurance contributions from April 2025, which have an annualized impact of circa GBP 4 million and GBP 8 million, respectively. Margin of 19% continues to be within our 19% to 23% range ambition.

During the period, GBP 7 million was recognized in respect of net research and development expenditure tax credits, which was the same as H1 2025. And free cash flow increased 16.2% to GBP 34.4 million due to the increase in adjusted EBITDA and favorable operating cash conversion, which was up 3.3 percentage points on H1 2025 and in line with our stated ambition of greater than 70% operating cash conversion. With robust cash generation and a strong balance sheet, we've continued to invest in future growth through CapEx investment and further acquisitions. We also undertook a small share buyback to support the move to the main market, which concluded in January 2026.

As a result of these investments, net bank borrowings increased to GBP 28.8 million since June 2025 to GBP 160.2 million and leverage increased to 1.41x. Leverage is well below our 2x target ceiling and provides firepower to continue with our ongoing expansion in Australia and the U.K. in due course.

Adjusted EPS of 40.2p was up 2.2p, benefiting from an increase in EBITDA. We continue to invest in our practice facilities, clinical equipment and technology with total capital expenditure of GBP 17.5 million, and Paul will touch on these more later. Consideration for acquisitions of GBP 23.3 million represents continued momentum in Australia with a further two acquisitions of nine practice sites. Pleasingly, performance has been in line with expectations. The group's short-term expansion focus will be in Australia, where there is a strong pipeline of exciting opportunities. There may also be acquisition opportunities in the U.K. following the end of the CMA investigation.

Moving on to Slide 10. I'm pleased with the resilient EBITDA performance, which has been underpinned by growth and acquisitions. Revenue increased to GBP 356.9 million from GBP 337.3 million, benefiting from acquisitions and like-for-like growth of 2.7%. Australia now represents about 10% of group revenue. EBITDA increased to GBP 67.7 million from GBP 65.1 million, benefiting from revenue growth with resilient adjusted EBITDA margin, which largely held up despite wage inflation in addition to investments in online marketing and IT.

We are pleased to have offset the vast majority of cost headwinds from the national insurance contributions and National Living and minimum wage pressure and deliver EBITDA margin within our stated range of between 19% to 23%. We continue to target investments primarily in practice facilities and equipment to expand margins over the longer term.

We've seen revenue growth across all our divisions. The Veterinary Practices division comprises our companion animal, referrals, farm animal and equine veterinary practices as well as our buying groups, Vet Direct and MiPet Insurance. This division delivered 5.4% growth in revenue, benefiting from acquisitions and a return to like-for-like growth despite softer market conditions in the U.K. and a backdrop of lower visit numbers in small animal practices. Client demand for our most advanced referral care, however, remains strong. EBITDA grew 6.3%.

The Laboratories division provides analyzers in practice, which supports testing in-house, for which we supply the reagents for the tests and diagnostic testing services. Revenue in this division increased 10.3%, benefiting from improved case volume and increased analyzers in practice. EBITDA grew 17.8%.

And our online retail business, revenue increased 8.5%, benefiting from improved visits and conversion rates following the launch of the new website in February 2025. Profitability in the first half was impacted by cost of living, compounded by price elasticity testing, resulting in the division only breaking even in the first half. Profit is expected to return in the second half of the year.

And in head office, we saw an increase in cost of GBP 1.2 million due to increased share option costs with options having not vested in the past few years, continued investment in people, especially in Australia and continued investment in IT. I'm pleased to say the momentum seen across the group in the first half has continued into H2 2026, and we continue to trade in line with market expectations.

On to Slide 12, 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. Our stated ambition is to invest GBP 30 million to GBP 50 million per annum on capital investment and over GBP 50 million on acquisitions, which has primarily been in Australia, but acquisition opportunities may open up in the U.K. post the CMA conclusion. We have funding in place to support this growth. The group continues to generate healthy cash flows with operating cash conversion of 75%, which is in line with our Capital Markets Day ambition of 70%. Free cash flow of GBP 34.4 million benefited from increased EBITDA and operating cash conversion.

With robust cash generation and a strong balance sheet, we've been able to continue to invest in future growth through CapEx investment and further acquisitions. We also undertook a small share buyback to support the move to the main market, which concluded in January 2026. As a result of these investments, net bank borrowings increased GBP 28.8 million from June 2025 to GBP 160.2 million and leverage increased to 1.41x. Leverage is well below our 2x target ceiling and provides firepower to continue with our ongoing expansion in Australia and the U.K. in due course.

We have committed bank facilities to February 2028 and have also hedged GBP 100 million of debt, swapping variable SONIA to fixed, securing an interest rate, including current margin of circa 5.5% through to February 2028. We take a considered and disciplined approach to capital allocation, actively engaging with shareholders and reviewing the approach on a regular basis. Presently, it's considered that investments in capital expenditure and acquisitions to be appropriate uses of capital to deliver long-term accretive growth to shareholders.

Investments are carefully appraised against our hurdle rate of greater than 10% IRR and in most cases, deliver positive return on capital employed over the longer term. Our investment unlocks opportunities as well as continued investment opportunities in facilities, clinical equipment and technology, there is a strong pipeline of acquisition opportunities in Australia and acquisition opportunities in the U.K. in due course.

We look forward to enhancing the client experience further and delivering on our purpose to give the best possible care to as many animals as possible.

I will now pass to Paul, our Chief Veterinary Officer, to update you on our strategic progress.

Thanks, Robin. Our new brand reflects who we are and what the letters CVS stands for: care, value and service. In the half, we have launched our dual brand approach initially to colleagues at our leadership conference in November, digitally to clients on our new consumer websites and then through updated signage, which is being rolled out across our U.K. companion animal sites as we speak. Our colleagues have welcomed this fantastic opportunity to speak about our common purpose and identity. Our client-friendly branding encapsulates why pet owners trust us, CVS, how our colleagues support and guide pet owners to find the most appropriate and individualized care and what we offer pets and their owners day in and day out. We are just a short walk away. Our new signage is fresh and it's consistent where practices retain their local name, but shows that they are part of the wider CVS Vet Group.

I'm pleased that our vision of being the veterinary company people most want to work for is delivering high colleague satisfaction and reduced attrition. We've launched our new clear employer brand centered around clinical quality, learning, progression and support. And these four elements encapsulate what our colleagues tell us is great about working at CVS. We aim to provide the best possible care to animals. We have a market-leading learning, education and development program with the platform Knowledge Hub and have established career pathways in our teams, especially for nurses and receptionists. Finally, we support. A practitioner is never alone, whether that's through support from our practice teams, our market-leading VetOracle service or well-being support. We listen and we care.

We also inspire to support exceptional employee experience, we have empowered accountable leaders, which drive and support our teams. Our colleague satisfaction has taken a knock in recent years, and we're pleased with the progression of our employee Net Promoter Score to positive 10 at December, ahead of our FY 2026 target of plus 5. Attrition continues to be stable and even reduced marginally in the half. And I would like to take this opportunity to thank all of our CVS colleagues for their outstanding commitment and dedication and for the care they provide to our clients and their animals.

Our considered approach to capital allocation supports our disciplined investment program. In H1 2026, we invested GBP 17.5 million in capital expenditure and continue to be committed to invest in our U.K. practices. In the half, we spent GBP 6.5 million on practice relocations, refurbishments and associated clinical equipment. We have a consistent, welcoming look and feel, which provides attractive spaces for both clients and colleagues. This investment has contributed to the improvement in both our client and employee engagement as measured through the group's respective Net Promoter Scores.

A practice-wide refurbishment or where required full relocation can benefit the clinical offering, practice teams and clients over the long term. We typically seek larger footprints, providing additional space to address the client demand for our services, improve clinical activity, for example, through imaging equipment, dental or endoscopy and these new facilities provide a positive environment for our clinical teams to work in, which not only can improve their well-being, but also attract further clinicians and provide secure business continuity over the long term. For now, the focus on capital expenditure remains in the U.K., but there will be opportunities to invest in Australia sites as we grow.

Over my career as a vet, the progress of veterinary care is second to none. What we can offer today is vastly improved from that of 2010 or even five years ago and what clients expect from us has changed too. The research underpins evidence-based veterinary medicine and CVS is committed to turning evidence into improved patient care. Each year, our colleagues contribute to over 100 peer-reviewed publications and present more than 30 research abstracts at leading conferences, sharing insights that shape the future of veterinary practice. We also fund external research collaborations with a recently funded research collaboration making the national news by providing a comprehensive human and feline comparative oncogenomics analysis that gives insight into feline cancer but also potentially human cancers, too. The CVS is shaping the future of veterinary nursing through a pioneering nurse optimization PhD launched in partnership with the Royal Veterinary College. This three-year project will explore how evidence-based frameworks can enhance job satisfaction, patient care and workforce sustainability and helping define the role of veterinary nurses for years to come.

In 2025, antimicrobial stewardship, AMS, remains a key research priority. Antimicrobial resistance is one of the most urgent global health challenges, and CVS is leading efforts to promote responsible prescribing and robust infection control. Our CVS-funded PhD project with the University of Liverpool is focused on reducing the use of highest priority, critically important antibiotics or HPCIAs and promoting diagnostic-led prescribing. Alongside this, a 12-month collaboration with the University of Bristol across more than 50 CVS practices is already showing promising results, reducing antibiotic use and encouraging behavior change through CPD training and case-based learning.

Now these are just a small number of examples of the wide-reaching research that we support. By embedding research into everyday practice and partnering with leading institutions, CVS is driving continuous improvement and fostering a culture of learning across our group. Our research agenda is focused on practical solutions that benefit patients, clients and the profession.

I'll now pass over to Richard for some closing remarks.

Thank you, Paul. We have taken a number of positive steps in the period, which positions CVS to deliver further enhanced value for all our stakeholders. As you have seen through this presentation, our new CVS Vs companion animal consumer brand is now live with circa 60 practices already rebranded. Our strategy for growth is clear to provide great client service and care to as many animals as possible. Our clients appreciate this care and the value and service we provide as reflected by the further increase in our client Net Promoter Score. We maintain a disciplined investment approach and have a healthy balance sheet. Strong operating cash flows support our ability to make further investment in growth.

Our step-up to the main market is complete, and we look forward to index inclusion in March. We remain on course to deliver against market consensus for the full year. And notwithstanding short-term headwinds in the U.K., we remain confident in delivering further growth.

These interim results and the improvements we have made in the financial year-to-date reflect the continued dedication and professionalism of all our colleagues. I would like to take this opportunity to thank them all for their support, and I look forward to sharing further success in the future.

Thank you for joining CVS Group today for the Engage Investor Q&A. We have Richard Fairman and Robin Alfonso here to answer questions. We have had a number of questions pre-submitted and submitted live. [Operator Instructions]

So kicking off with the first question, what has been driving sales growth lately? And are there any standout products and services?

So we've announced like-for-like growth of 2.7% for the first half, which is across all three of our divisions. Our largest division is our practice division, and that includes our Australian practices and also all of our U.K. practices. And there, we've seen growth in Australia, so strong growth there. In the U.K., we've seen mixed growth. We've seen strong demand for our referral hospitals and some of our practices that provide the more advanced care. So where animals get ill or injured, we've seen strong demand for those types of services. We've seen weaker demand for the more preventative care, so regular checkups, routine checkups or free and welling treatments.

Online, we've seen strong growth in revenue across both food and drugs. And in our laboratory business, we've also seen growth both from our own practices, but also third-party independent practices. And roughly half of our revenue in labs is from CVS internal practices and roughly half external. So good growth across the group, albeit mixed within the U.K. companion animal practices.

Are you able to give an indication of the revenue that comes from preventative care plan versus reactive treatment?

We can. We can do. I think what we've shared in the past is our Healthy Pet Club membership is now over 0.5 million members. It provides -- it's an annual contract pay monthly, provides annual vaccination, half yearly checkup, your annual flea and warming and also access to discounted veterinary services.

I think we've shared in the past, and you can look in terms of the average cost per month is around GBP 15. So the annual revenue from that, which is ostensibly a preventive health care scheme is about GBP 80 million to GBP 90 million per annum. What we've not done is then share the split of preventative care within our fees and drugs revenue. But for a Healthy Pet Club scheme, it's about GBP 80 million to GBP 90 million per annum.

Cost of living is a concern for many households. Are you seeing these pressures flow through into the pet industry? And can you explain why vet bills have gone up so much in recent years?

So cost of living pressures do impact. We're not immune from recessions or clients feeling some of those cost of living pressures themselves. What we have seen is strong demand where animals get injured, clients invariably bring them in for treatment. And as I said earlier, that's reflected in the strong demand we've seen for our referral hospitals and also those sites that can do the more advanced reactive care. Where we have seen weaker demand is for the more, I guess, discretionary spend, so healthy animals visiting practices less often and maybe consumers tightening their belts somewhat in those areas.

In terms of veterinary bills, bills across the industry have increased over the last 10 years, and the CMA have given some data on that. When you take account of the kind of inflationary pressures, the increase above inflation is actually driven by the quality of care that we can now provide and also the way that care is provided and the structure of veterinary practices. So 10 or 20 years ago, out of care, for instance, was provided by day vets who were on call in the evenings and weekends.

Now out of those care is more advanced. It's provided by dedicated teams. And those teams are often trained in emergency and critical care. So the quality of care we can give out of ours is vastly improved. And elsewhere, we can do far more for animals now than ever before. And therefore, there is a cost that comes with that, but clients invariably want the best possible care for their animals. And clearly, there's a cost to delivering that care. So when you take account of inflation and quality of care, prices have risen in line with those two factors.

Maybe I could just add, if you look at the stat the CMA themselves announced, they said they saw price increases of between 60% to 70% over the last 8 to 10 years. Now as a headline stat, that sounds like a lot. But when you break that down, that's rough just over a 5% increase for each of those years. And as Richard said, inflation during that period was about 3.5% to 4% of that 5%. And therefore, the small incremental amount above inflation, we think is because of the improved quality of care that's been available over that period.

Is there a margin benefit from owning your own labs, online retail business, buying groups and white label pharmaceutical products?

There is, I guess, some synergies from having an integrated group. If you take our labs, they do provide obviously services to our practices. And clearly, having that work provided in-house improves our group margin. If it wasn't for us having our own labs, we'll be using third-party labs and obviously missing out on that revenue, but also the margin it brings.

Online retail, we tend to attract non-practice clients. So most of our online retail clients are not CVS practice clients. And again, that does create incremental margin. In the first half, having said that, the margins in Animed Direct or online retailer were pretty flat. We do expect to return to growth in the second half.

Buying groups provide a service to third-party independent practices because -- we have scale. We can buy drugs more cost effectively than an independent practice can. But for a fee, we allow independent practices to access our scale and share some of that buying power. And obviously, the more practices and the more drugs we are buying drugs for, that increases the volumes overall. So that also helps our group margins.

And on white label pharma, is that beneficial?

Most of our drugs we buy through a wholesaler, and we negotiate a wholesaler discount based on the volume of drugs we provide -- we purchase. We then also go to the manufacturers and negotiate rebates based on the volumes of drugs we buy from those manufacturers. So we work to kind of what we call net-net prices, so net of the wholesaler discount, net of the manufacturer rebate.

For certain drugs where there's high volume and predictability of future demand, we have approached manufacturers directly and negotiated directly with them. That means we bypass the wholesaler and we negotiate slightly better rates and the manufacturer will work with us to brand those under our own brand.

So that can improve margins. Equally, though, we need to make sure that we are going to sell the entire quantity we've committed to purchase. And therefore, it's not that straightforward. We need to tread carefully there. But we have seen slightly enhanced margins that -- but also the ability to pass on cheaper prices to consumers from having own brand medicines.

Are existing practices growing? Or are you relying on buying more clinics to drive growth?

So across the group, we are seeing growth, but we are actively acquiring additional practices in Australia, and those acquisitions are driving incremental growth to the group. In the U.K., we stopped acquiring practices just over two years ago when it became clear that the CMA were moving towards a market investigation. We just felt it wasn't appropriate to carry on acquiring because of the uncertainty of the CMA process.

Now that we've had the CMA's provisional decision in October, we have certainty again at last. So we do consider there will be U.K. acquisition opportunities present themselves in the future, and we do -- we are confident in our ability to make further acquisitions. So that should also hopefully drive incremental growth in the future.

Is the long-term growth driver for CVS more about increasing spend per pet or increasing the number of pets under care?

Both, but I'll let Robin elaborate.

Yes. I think definitely both. I think the third category I would add to that is just increasing the number of visits per animal under our care. So I think the one thing that we have seen recently, we've delivered good growth. I think what Richard referenced earlier that within our companion animal business, we've seen the higher acuity work, our referral hospitals perform well. But where we have seen some footfall challenges is for those preventative health care visits into our companion animal first opinion practices. And our focus there is how do we -- how do you drive volume through our practices. And we think that we're keen to remind our clients and prospective clients about the benefits of visiting a veterinary practice. And then we want to make it really easy for them to access our services.

So we've recently launched online booking across all of our practices. There are improvements that we can make to that journey. We want to make more of the slots available online, so that makes it easier for them to book. And also, we've been focusing on opening up our clinicians' diaries to allow them to book further in advance. And that's true for online booking and also within practices because we're really keen to ensure that clients don't leave our practice without knowing when their next appointment is.

And then from a communication perspective, I think we've got one common practice management system, which is great. We have all of our client information, contact details, their animals, what life stage they're at. Historically, a lot of our marketing has been led locally, but there is an opportunity for us to really stand up a true trigger-based kind of customer engagement program to really kind of remind people of the value of listening a vet and encourage footfall into our practices.

So I actually think that one of the biggest areas of potential like-for-like growth going forward is volume in terms of number of visits. But equally, as we improve the customer experience, I'm also hopeful that we can win more clients. And when we have those clients, we can do more in terms of the work that we perform for them.

What is your acquisition pipeline looking like? And how important is it to your growth strategy?

So we do see good growth opportunities from further acquisitions. In Australia, we have a pipeline. We have a number of deals where we've had offers accepted, and we're in the process of undertaking due diligence, and we are confident of making further acquisitions in this second half of this financial year. We've now got 55 practice sites in Australia, and we're very confident of growing further through acquisitions.

In the U.K., we don't have any offers accepted. It's the very early stages of acquisitions hopefully opening up again. But we have had some conversations with vendors. And hopefully, that does lead to a pipeline building over the course of this calendar year.

Is Australia more profitable than the U.K.?

Structurally, no, but we've consciously acquired very high-quality practices in Australia. So typically, we are buying larger practice groups, so four or five vets or more. And we're also buying really good quality facilities in great locations. And those types of practices do deliver higher margins. So we've said consistently that our Australia business is higher margin than the group, and we've talked about sort of 25% plus EBITDA margins. Those types of practices though in the U.K. are also high margin. So, at the moment, Australia margins are higher than the group, but equally, it's because of the quality of the facilities we've acquired.

So, Australia sounds like it's been successful to date. Are you looking at new markets?

Yes, I can do. I think from a capital perspective, we have a strong balance sheet. We have low leverage. So we do have the ability to deploy capital. We assess all of our investments based on a minimum hurdle rate of 10% IRR, be it capital investment in our own facilities in the U.K., be it U.K. acquisitions if they present themselves at a value that are as appropriate for us and acquisitions in Australia.

So I think what I'm trying to say is that we have plenty of places currently to deploy capital. The U.K. market, we represent 9% of the market. And therefore, we know the CMA are comfortable with local market share up to 30%. And there's 40% of the market that's yet is unconsolidated independent practices. So there's a large runway in the U.K. if the valuations come down. In Australia, low levels of consolidation, so 15% to 20% consolidation. So, again, a long runway and opportunities for us to grow there. So I don't think there's any need for us to enter a new market. And actually, for me, I'm keen to reestablish a meaningful footprint in Australia.

Having said that, as a management team, we always assess what new opportunities are available. And therefore, we keep a watching brief across other territories. And if something looks like it's an opportunity for us, then that's something we will consider seriously.

Will tele vet services become a threat to CVS and the veterinary industry?

I think tele services can play a part as they did during the peak COVID period where we were restricted for a period of time from providing the kind of more routine services. So, back in COVID, we could only provide emergency and critical care. And we found telemedicine was a way of contacting clients, having discussions about their pets. But there's no substitute for vets physically examining animals. And it's a bit like pediatric care in human health care. Pets can't talk and can't tell you what's wrong with them. So telemedicine is never going to replace the requirement for vets to examine animals and then come up with treatment plans and diagnosis.

So, yes, it can play a part, and I think it can play a part in things like triage, particularly out of hours. So if a client has a concern about their animal, the ability to phone up a vet and talk through their concerns, absolutely telemedicine plays a part there. But ultimately, animals need to be examined by vets and the vet expertise is kind of required. So I don't really see it as a threat. I think it's an opportunity to improve kind of operational performance, but it won't be ultimately a threat.

I mean I agree. I don't think it's a substitute, but it will be complementary to the services we already provide.

Can you update us on the historic vet shortages in the industry? And our newly qualified vets staying longer at CVS compared to industry averages?

So I'm pleased to say the position there has improved. A few years back, probably in the early 2020s, we saw more of a chronic shortage of vets, partly because of the Brexit referendum results and the fact that the uncertainty that caused created less European vets coming to the U.K. and also some of the European vets working in the U.K. previously decided to return home.

Now we've got Brexit certainty. We're seeing a return of EU vets coming to work in the U.K. We've also seen the number of university vet schools in the U.K. increase, and therefore, the number of graduate vets increasing each year, and that will accelerate further from here. So the Royal College of Veterinary Surgeons are now modeling and suggesting that there won't actually be a shortage of vets at all in the U.K. for companion animal practices in the next kind of five to six years. So things are looking much more positive than they were.

In terms of graduates, we have a very advanced graduate induction program, and it's recognized, I think, across the industry as being a leading graduate induction program. So we attract our fair share of graduates, and we have the pick of the best graduates. And we've seen our retention across not just graduate vets, but also experienced vets improve significantly over the last six or seven years. And that's reflected in the attrition rates that have fallen significantly, but also the engagement scores. So we measure colleague engagement monthly through a very simple kind of eNPS survey and colleague engagement has improved in that period as well.

Can you update us on the CMA and what the findings mean for CVS?

Robin?

Yes, I can do. So CMA have issued their draft remedies. We're expecting the decision on the final remedies to happen at some point in March, and that's the current timetable. The statutory deadline is May 22, so that has to be concluded by then. If I think about some of the remedies, I suppose I can put them into broad buckets. There's some transparency measures that we are entirely comfortable with. So things like price transparency, which we already put on our websites, things like transparency of ownership. We'd like to think that most of our customers are aware that they're using a CVS practice, but we are going through a process of jointly branding and rebranding our sites.

There's a bucket around regulatory change. And actually, that's more around the regulator's ability to be able to regulate the likes of myself and Richard as directors of veterinary businesses. whereas at the moment, they can only regulate the vets themselves that work at veterinary businesses, and we're entirely comfortable with that. There's some other kind of regulatory changes they're recommending around access to our sites and minimum standards. And we already voluntarily comply with the practice standard scheme that's run by the RCVS. So we're ready to do that.

And then the third bucket is just around access and pricing of medicines within our practices. And the biggest remedy of which currently is this recommendation to cap prescription fees at GBP 16. Now we currently charge more than GBP 16. However, I think the impact for us is small, and it takes a very small increase in fees to offset the impact for us in the P&L. I suspect if they do continue with that remedy, then the entire market will behave in the same way.

I think when you look at the evidence and proportionality of those remedies, that's the one that feels slightly disproportionate for us. But having said that, when you look across the 21 or so remedies that they've outlined, we're comfortable with all of them. In fact, I suppose our expectation is potentially the CMA will rein them in and they may be slightly narrower when it comes to the final decision, which we expect imminently.

I would just add as well that I think the CMA process has been painful, frankly. It's had a significant impact on vets who have read and nurses who have read the press articles, accusing them of being expensive. There have been articles accusing vets of not caring about the animals and only being in it for the money, which are completely so far from the truth. It's -- those are unfair. But finally, we've got CMA certainty. And as Robin said, we'll get the final decision very shortly, and that will bring a close to the process, which is, yes, long overdue.

What is the impact of AI on the veterinary sector? And will it be positive or negative?

Positive again, I think similar to the kind of telemedicine question. So AI can play a part. But as I said earlier, there's no substitute for vets examining animals and a physical inspection. So AI can't replace vets. AI won't be able to treat animals. What AI can do is help with the efficiency of our operations. We're already trialing AI in the consulting room. So we are trialing an AI scribing tool, which actually will lead to hopefully a richer experience for the client because the tool works by listening to the vet and the vet having to vocalize their examination, but it essentially produces the clinical notes for the vet at the end of the consultation. And that should reduce time, but also lead to a richer experience for the client because the vet has to vocalize their examination and then the clients will really understand what's happening and what the vet is doing.

The other benefit from that as well is it allows the vet to very simply give a summary of the consultation and the discussion and send that summary to the client post consultation via e-mail. And there are stats that show that most clients forget kind of 90% of what's told to them in the consulting room. And so that also gives clients hopefully a better experience and also prompts in terms of things they need to watch out for post the visit or actions they need to take or the next checkup they need to book in due course.

With an enterprise value of 7x, would you consider share buybacks rather than U.K. M&A, which may cost more than 7x EBITDA?

So our share -- our market cap compared to our EBITDA is around about the kind of 8x level. And so we do consider capital allocation very seriously as a Board. We do believe in the ability to deploy capital and drive long-term shareholder value, whether through capital expenditure or through acquisitions. But clearly, we have a duty to maximize shareholder value as well as grow the business and provide the right facilities for our colleagues and the right experience for our clients. So this is something we will keep under regular review, but we have no plans to do further share buybacks at the moment.

Do you expect the issues in the Middle East to have any impact on your business and forecast?

Very limited impact. We have very little reliance on the oil price or impact from the oil price. We obviously buy energy and utilities. And there, we have forward bought contracts, so we are protected at the moment. Clearly, if there's a knock-on impact on consumer spending power, that can impact us in due course. So, hopefully, the conflict is short-lived and things get resolved very quickly.

On a practical point, traveling to Australia is more problematic and the flights will therefore be more expensive and longer, but that's a very practical minor point, but very limited impact expected from that conflict.

I suppose it's been helpful that we've just appointed our first permanent Managing Director of Australia. So previously, we have had an Australia MD, but it's been a second from the U.K. So we now have our first permanent Managing Director. They have support colleagues in Australia also supporting the operations. So I don't think it necessarily needs us to travel to Australia actually for those operations to run very smoothly because we have a team already in place.

Okay. Thank you to Richard and Robin from the management team today for joining us. This concludes CVS Group's investor presentation. Please take a moment to complete a short survey following this event, and the recording of this presentation will be made available on the Engage Investor. I hope you enjoy today's webinar.

Welcome to this presentation of CVS Group's Interim Results for the 6-Month Period to December 2025. I'm Richard Fairman, CEO. And later, you will also hear from Robin Alfonso, our Chief Financial Officer; and Paul Higgs, our Chief Veterinary Officer.

Our purpose at CVS is to give the best possible care to as many animals as possible, and I'm pleased to report on continued progress in the period. We completed our step-up from AIM to the Main Market on the 29th of January 2026, and we hope this will bring benefits from improved liquidity, access to a more diverse pool of capital, index inclusion from March and an increase in our profile as a company.

We have launched our new consumer-facing U.K. companion animal joint brand under CVS Vets, and you will see this reflected in this presentation. Now this reflects the care, value and service, which we are renowned for as a trusted partner for our clients. Our presence in Australia is growing with 3 acquisitions completed in the period and a further 2 practice acquisitions completed so far in the second half of the year.

We have continued our disciplined capital investment, improving our facilities, clinical equipment and technology, and we are confident this investment will drive long-term growth in shareholder value. We welcome the launch by DEFRA of a consultation into the outdated Veterinary Surgeons Act from 1966, and we are engaging with that process and encouraging CVS colleagues to do so. And we look forward to the CMA's final decision in the coming weeks. We continue to trade in line with market expectations, and Robin will provide further detail on our financial performance later.

Highlights for the first half include revenue increased by 5.8% in the period with growth across all divisions and like-for-like sales improving. Adjusted EBITDA increased by 3.9% to GBP 67.7 million. We invested GBP 17.5 million in capital expenditure but maintained leverage at 1.41x. We saw an improvement in both our client Net Promoter Score, which improved to 81.2 and our employee Net Promoter Score to 10.

Having first entered Australia in July 2023, we have grown to 33 practices operating across 55 sites. Our Australia practices are performing well and now present circa 10% of group revenue. We have consciously focused on acquiring larger, high-quality small animal first opinion practices with strong leadership teams, great facilities and excellent reputations. These practices tend to deliver higher margins, and hence, Australia now represents circa 15% of group EBITDA. The Australian market has low levels of consolidation, and we have a strong pipeline and an expectation that we will complete a number of further acquisitions in the remainder of this financial year.

Whilst the level of corporate consolidation is higher in the U.K. at circa 60%, we have less than a 9% market share, and we are confident there will be an opportunity for CVS to make further high-quality acquisitions following the conclusion of the CMA process. The CMA market investigation has been underway for the past 2.5 years, and we have proactively engaged with the CMA throughout this time. This is to both help the CMA understand the sector and some of the challenges but importantly, to ensure an appropriate outcome in the best interest of consumers. The CMA announced their provisional decision in October 2025, and this has brought much needed certainty.

We do not agree with all of the CMA proposed remedies and feel some such as the proposed price cap on prescription fees are not justified by their findings. However, we are comfortable with them and have already implemented price lists on our practice websites and have commenced the rollout of our new joint branding. We will continue to support the CMA during the remainder of their investigation and look forward to the publication of their final decision scheduled for the coming weeks.

I will now pass over to Robin, who will provide further color on our financial performance in the period.

Thanks, Richard. H1 2026 marked a return to organic like-for-like sales growth as well as growth from acquisitions, cementing a positive first half performance. In May 2025, we sold our crematoria operations and have therefore, restated our H1 2025 numbers to reflect these operations as discontinued. Revenue grew 5.8% to GBP 356.9 million, benefiting from acquisitions made in the current and prior year with like-for-like growth of plus 2.7%. Our like-for-like sales growth is adjusted for working days and on a constant currency basis. It excludes current year acquisitions, and it only includes prior year acquisitions from the same month this year as they were acquired in the previous year.

We are pleased that revenue growth has been achieved across all divisions. This growth was achieved despite continued softer market conditions in the U.K. and a backdrop of lower visit numbers in small animal practices. Client demand for our most advanced referral care remains strong. Adjusted EBITDA grew 3.9% to GBP 67.7 million, benefiting from increased revenue. And adjusted EBITDA margin of 19% was down 0.3 percentage points versus prior year with cost efficiencies and synergies largely offsetting the increase in national living and national minimum wage alongside increases in employers' national insurance contributions from April 2025, which have an annualized impact of circa GBP 4 million and GBP 8 million, respectively. Margin of 19% continues to be within our 19% to 23% range ambition.

During the period, GBP 7 million was recognized in respect of net research and development expenditure tax credits, which was the same as H1 2025. And free cash flow increased 16.2% to GBP 34.4 million due to the increase in adjusted EBITDA and favorable operating cash conversion, which was up 3.3 percentage points on H1 2025 and in line with our stated ambition of greater than 70% operating cash conversion.

With robust cash generation and a strong balance sheet, we've continued to invest in future growth through CapEx investment and further acquisitions. We also undertook a small share buyback to support the move to the Main Market, which concluded in January 2026. As a result of these investments, net bank borrowings increased GBP 28.8 million since June 2025 to GBP 160.2 million and leverage increased to 1.41x. Leverage is well below our 2x target ceiling and provides firepower to continue with our ongoing expansion in Australia and the U.K. in due course.

Adjusted EPS of 40.2p was up 2.2p, benefiting from an increase in EBITDA. We continue to invest in our practice facilities, clinical equipment and technology with total capital expenditure of GBP 17.5 million, and Paul will touch on these more later. Consideration for acquisitions of GBP 23.3 million represents continued momentum in Australia with a further 2 acquisitions of 9 practice sites. Pleasingly, performance has been in line with expectations. The group's short-term expansion focus will be in Australia, where there is a strong pipeline of exciting opportunities. There may also be acquisition opportunities in the U.K. following the end of the CMA investigation.

Moving on to Slide 10. I'm pleased with the resilient EBITDA performance, which has been underpinned by growth in acquisitions. Revenue increased to GBP 356.9 million from GBP 337.3 million, benefiting from acquisitions and like-for-like growth of 2.7%. Australia now represents about 10% of group revenue. EBITDA increased to GBP 67.7 million from GBP 65.1 million, benefiting from revenue growth with resilient adjusted EBITDA margin, which largely held up despite wage inflation in addition to investments in online marketing and IT.

We are pleased to have offset the vast majority of cost headwinds from the national insurance contributions and national living and minimum wage pressure and deliver EBITDA margin within our stated range of between 19% to 23%. We continue to target investments primarily in practice facilities and equipment to expand margins over the longer term.

We've seen revenue growth across all our divisions. The veterinary practice division comprises our companion animal, referrals, farm animal and equine veterinary practices as well as our buying groups, Vet Direct and MiPet Insurance. This division delivered 5.4% growth in revenue, benefiting from acquisitions and a return to like-for-like growth despite softer market conditions in the U.K. and a backdrop of lower visit numbers in small animal practices. Client demand for our most advanced referral care, however, remains strong. EBITDA grew 6.3%.

The laboratories division provides analyzers in practice, which supports testing in-house, for which we supply the reagents for the tests and diagnostic testing services. Revenue in this division increased 10.3%, benefiting from improved case volume and increased analyzers in practice. EBITDA grew 17.8%.

And our online retail business, revenue increased 8.5%, benefiting from improved visits and conversion rates following the launch of the new website in February 2025. Profitability in the first half was impacted by cost of living compounded by price elasticity testing, resulting in the division only breaking even in the first half. Profit is expected to return in the second half of the year.

And in head office, we saw an increase in costs of GBP 1.2 million due to increased share of option costs with options having not vested in the past few years, continued investment in people, especially in Australia and continued investment in IT. I'm pleased to say the momentum seen across the group in the first half has continued into H2 2026, and we continue to trade in line with market expectations.

On to Slide 12, 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. Our stated ambition is to invest GBP 30 million to GBP 50 million per annum on capital investment and over GBP 50 million on acquisitions, which has primarily been in Australia but acquisition opportunities may open up in the U.K. post the CMA conclusion. We have funding in place to support this growth.

The group continues to generate healthy cash flows with operating cash conversion of 75%, which is in line with our Capital Markets Day ambition of 70%. Free cash flow of GBP 34.4 million benefited from increased EBITDA and operating cash conversion. With robust cash generation and a strong balance sheet, we've been able to continue to invest in future growth through CapEx investment and further acquisitions. We also undertook a small share buyback to support the move to the Main Market, which concluded in January 2026. As a result of these investments, net bank borrowings increased GBP 28.8 million from June 2025 to GBP 160.2 million and leverage increased to 1.41x. Leverage is well below our 2x target ceiling and provides firepower to continue with our ongoing expansion in Australia and the U.K. in due course.

We have committed bank facilities to February 2028 and have also hedged GBP 100 million of debt, swapping variable SONIA to fixed, securing an interest rate, including current margin of circa 5.5% through to February 2028. We take a considered and disciplined approach to capital allocation, actively engaging with shareholders and reviewing the approach on a regular basis. Presently, it's considered that investments in capital expenditure and acquisitions to be appropriate uses of capital to deliver long-term accretive growth to shareholders. Investments are carefully appraised against our hurdle rate of greater than 10% IRR and in most cases, deliver positive return on capital employed over the longer term.

Our investment unlocks opportunities as well as continued investment opportunities in facilities, clinical equipment and technology, there is a strong pipeline of acquisition opportunities in Australia and acquisition opportunities in the U.K. in due course. We look forward to enhancing the client experience further and delivering on our purpose to give the best possible care to as many animals as possible.

I will now pass to Paul, our Chief Veterinary Officer, to update you on our strategic progress.

Thanks, Robin. Our new brand reflects who we are and what the letters CVS stands for: care, value and service. In the half, we have launched our dual brand approach initially to colleagues at our leadership conference in November, digitally to clients on our new consumer websites and then through updated signage, which is being rolled out across our U.K. companion animal sites as we speak.

Our colleagues have welcomed this fantastic opportunity to speak about our common purpose and identity. Our client-friendly branding encapsulates why pet owners trust us, CVS, how our colleagues support and guide pet owners to find the most appropriate and individualized care and what we offer pets and their owners day in and day out. We are just a short walk away. Our new signage is fresh and consistent, where practices retain their local name but shows that they are part of the wider CVS Vet Group.

I'm pleased that our vision of being the veterinary company people most want to work for is delivering high colleague satisfaction and reduced attrition. We've launched our new clear employer brand centered around clinical quality, learning, progression and support. And these 4 elements encapsulate what our colleagues tell us is great about working at CVS. We aim to provide the best possible care to animals. We have a market-leading learning, education and development program with the platform Knowledge Hub and have established career pathways in our teams, especially for nurses and receptionists. Finally, we support. A practitioner is never alone, whether that's through support from our practice teams, our market-leading vetorracical service or well-being support. We listen and we care.

We also inspire to support exceptional employee experience, we have empowered accountable leaders, which drive and support our teams. Our colleague satisfaction has taken a knock in recent years, and we're pleased with the progression of our employee Net Promoter Score to positive 10 at December, ahead of our FY 2026 target of plus 5. Attrition continues to be stable and even reduced marginally in the half. And I would like to take this opportunity to thank all of our CVS colleagues for their outstanding commitment and dedication and for the care they provide to our clients and their animals.

Our considered approach to capital allocation supports our disciplined investment program. In H1 2026, we invested GBP 17.5 million in capital expenditure and continue to be committed to invest in our U.K. practices. In the half, we spent GBP 6.5 million on practice relocations, refurbishments and associated clinical equipment. We have a consistent, welcoming look and feel, which provides attractive spaces for both clients and colleagues. This investment has contributed to the improvement in both our client and employee engagement as measured through the group's respective Net Promoter Scores.

A practice-wide refurbishment or where required, full relocation can benefit the clinical offering, practice teams and clients over the long term. We typically seek larger footprints, providing additional space to address the client demand for our services, improve clinical activity, for example, through imaging equipment, dental or endoscopy, and these new facilities provide a positive environment for our clinical teams to work in, which not only can improve their well-being but also attract further clinicians and provide secure business continuity over the long term. For now, the focus on capital expenditure remains in the U.K, but there will be opportunities to invest in Australia sites as we grow.

Over my career as a vet, the progress of veterinary care is second to none. What we can offer today is vastly improved from that of 2010 or even 5 years ago and what clients expect from us has changed too. research underpins evidence-based veterinary medicine and CVS is committed to turning evidence into improved patient care. Each year, our colleagues contribute to over 100 peer-reviewed publications and present more than 30 research abstracts at leading conferences, sharing insights that shape the future of veterinary practice.

We also fund external research collaborations with a recently funded research collaboration making the national news by providing a comprehensive human and feline comparative oncogenomics analysis that gives insight into feline cancer but also potentially human cancers, too. The CVS is shaping the future of veterinary nursing through a pioneering nurse optimization PhD launched in partnership with the Royal Veterinary College. This 3-year project will explore how evidence-based frameworks can enhance job satisfaction, patient care and workforce sustainability and helping define the role of veterinary nurses for years to come.

In 2025, antimicrobial stewardship, AMS, remains a key research priority. Antimicrobial resistance is one of the most urgent global health challenges, and CVS is leading efforts to promote responsible prescribing and robust infection control. Our CVS-funded PhD project with the University of Liverpool is focused on reducing the use of highest priority, critically important antibiotics or HP-CIAs and promoting diagnostic-led prescribing. Alongside this, a 12-month collaboration with the University of Bristol across more than 50 CVS practices is already showing promising results, reducing antibiotic use and encouraging behavior change through CPD training and case-based learning.

Now these are just a small number of examples of the wide-reaching research that we support. By embedding research into everyday practice and partnering with leading institutions, CVS is driving continuous improvement and fostering a culture of learning across our group. Our research agenda is focused on practical solutions that benefit patients, clients and the profession.

I'll now pass over to Richard for some closing remarks.

Thank you, Paul. We have taken a number of positive steps in the period, which positions CVS to deliver further enhanced value for all our stakeholders. As you have seen through this presentation, our new CVS Vets companion animal consumer brand is now live with circa 60 practices already rebranded. Our strategy for growth is clear to provide great client service and care to as many animals as possible. Our clients appreciate this care and the value and service we provide as reflected by the further increase in our client Net Promoter Score.

We maintain a disciplined investment approach and have a healthy balance sheet. Strong operating cash flows support our ability to make further investment in growth. Our step-up to the Main Market is complete, and we look forward to index inclusion in March. We remain on course to deliver against market consensus for the full year. And notwithstanding short-term headwinds in the U.K., we remain confident in delivering further growth. These interim results and the improvements we have made in the financial year-to-date reflect the continued dedication and professionalism of all our colleagues.

I would like to take this opportunity to thank them all for their support, and I look forward to sharing further success in the future.

All right. Good morning, everyone, and welcome to this live stream of CVS Group's full year financial results following the publication of those earlier this morning. I'm Richard Fairman, CEO. And alongside me, I've got Robin Alfonso, our CFO; and Paul Higgs, our Chief Veterinary Officer.

We have delivered further growth across our group in the past year with improved U.K. operations and continuing expansion of our platform in Australia. Revenue increased by 5.4% to GBP 673.2 million. We faced some challenges particularly in the first half of the year with softer market conditions in the U.K., but it was pleasing to see significant improvement in the final quarter, leading to a positive full year performance with like-for-like growth of 0.2% across the group and 1% in our core practice division. And then improved trading continued into the first quarter of the new financial year.

Adjusted EBITDA increased by 9.4% to GBP 134.6 million from both acquisitions and continued disciplined cost management, and adjusted EBITDA margin increased by 70 basis points to 20%. Adjusted operating cash conversion was 76.9% for the year, ahead of our stated ambition of circa 70%. And in light of these strengthened operating cash flows and also the proceeds from the sale of our Crematoria business at a 10x EBITDA multiple, we finished the year with leverage of 1.18x.

We completed a further 7 practice acquisitions in Australia, and we've completed a further 2 acquisitions comprising 8 practice sites so far this new financial year. And that brings our total footprint in Australia to 51 sites.

We're coming towards the end of the CMA market investigation. And whilst it was disappointing to face a further delay in the announcement of their provisional decision, we do look forward to receiving that very shortly. Now the strong market fundamentals remain attractive and we are well positioned for further growth. We've strengthened our company, and we're confident with the future growth prospects.

So with that, I'd now like to open the call to questions from analysts. Now given this call is being live streamed, when you ask a question, please state your name and firm. And I think that will be helpful.

Charles?

Charles Hall from Peel Hunt. Richard, could we start on Australia? And can you just give a feel for how the market is trending there, now you've got plenty that have been under your belt for every year? Also discuss the synergies you're starting to see and a little bit on the cost of acquisitions and the pipeline.

Yes. So if I start with the overall performance in Australia. We've been quite selective, as you know, in terms of the acquisitions we've made. We're looking for high-quality, typically larger practices with 4 or 5 vets or more. And we're buying practices consciously in areas of high population and, therefore, areas where there are lots of pets. They also happen to be the areas where vets want to work and live.

So that disciplined approach has served as well. We're pleased with the performance in Australia, and we've seen continued growth and the practices are performing in line with business cases. In terms of the market, demand has been good. The margins of those practices are above our group margin. And in terms of investments and financial returns, I'll probably pass over to Robin to comment.

Yes. So I think in terms of -- you asked a couple of questions around kind of cost of acquisition and pipeline. So our cost of acquisition largely are in two buckets. There's the cost of the DD and also Australia has stamp duty. But also in Australia, typically, when we value a business, I think we've said this before, 80% is paid upfront and then a proportion of 20% is deferred over a period of time. That gives us some protection but also leaves the vendor with some skin in the game and the opportunity to earn further value. There are -- that is a contingent consideration and that gets booked as a cost of acquisition through the P&L.

In terms of pipeline, the pipeline is strong. I think in Australia, there are probably three major players. There's Greencross, there's VetPartners -- different from VetPartners in the U.K. and ourselves. And together, we have about 15% to 20% of the overall market compared to 60% in the U.K. So there's good opportunity. We spent just under GBP 30 million last year. To date, in the first quarter, we spent about GBP 23 million on two acquisitions, one larger acquisition of 6 sites. And we have a strong pipeline of opportunities where we've got agreed terms, we're just running through DD, and a much longer list of opportunities of people that we're talking to. So there's a really good strong opportunity for further growth in Australia.

That's great. And is there anything to highlight from the Sydney acquisition?

I think the main highlight for us is we were -- I mean, it's a decent group of practice in Sydney, the capital in Australia. What we were slightly -- we knew it was a premium asset. But actually, when we made the acquisition, there were a number of people even in the U.K. that said, we are aware of that group of practices, and it's really pleasing to see that you've acquired it and it's part of your portfolio.

So I think, for us, what we have been seeing is as we acquire premium assets, veterinary is quite a small community. Vendors will speak to other colleagues, and we're finding that we're getting an increased kind of inbound traffic now into us in terms of potential further opportunity to acquire their practices in due course.

Kane?

Kane Slutzkin from Deutsche. Just, guys, on the sort of exit rates going to '26. You've obviously spoken about a better second half. It looks like vet practices did sort of 2% in the second. But could you just talk about that exit rate going into this year, bearing in mind the Q4 comp was relatively soft for the cyber event? So anything you could help us with there?

And following on from that, sort of just thinking more medium term, the 4% to 8%, you're still kind of reiterating as a target. I appreciate timing is uncertain. But what do you need to do to build back up to there?

Yes. And maybe I'll pick the second part first and Robin can pick up the first part. But in terms of our 4% to 8% medium-term ambition, absolutely, we are committed to that and confident we can get back to that level. I guess a number of factors at play there. One is hopefully improved consumer confidence in the U.K. We all eagerly await the announcement in November in the latest budget. But it does feel like consumer confidence is slowly returning, but we want that to continue.

Certainty from the CMA process, I think, will help because the scrutiny the sector has been under over the last couple of years and some of the kind of press articles haven't helped the sector. And then there's the cohort of puppies and kittens born in their peak COVID period that are now typically kind of healthy animals, kind of 4 or 5 years old. But we all know they will age and, as like humans, more things go wrong in later life and more clinical care is required. So there's that kind of tailwind, if you excuse the pun, that will benefit our numbers in due course.

In terms of the final quarter and leading into the first quarter of the new financial year, maybe just ask Robin to give a bit more color.

Yes. So Ken, we haven't shared like-for-like number in terms of the year-to-date like-for-like percentage growth. But we have given some, I suppose, data points. H1 was minus 1.1%. We said we didn't return to growth until Q4 and the full year landed at positive 0.2%. So simple math would dictate, we saw probably underlying 2% to 3% growth through the final quarter. And yes, we had a cyber event in that final quarter in our comparatives, but it's pleasing to see that growth continue into the new year.

And maybe just one quick one. Just thinking now, we've got the guide is sort of -- seems consistent with consensus. Just wondering sort of how much inorganic growth -- I mean, I probably need to do the numbers myself, but while I'm here, if you could help me.

Just sort of post period end acquisition, the bigger one you've announced, how much revenue and EBITDA is that? Is it sort of like GBP 10 million to GBP 15 million of rev and maybe GBP 2 million, GBP 3 million of EBITDA? I'm just trying to get a sense of how much -- it's becoming a little bit tricky now with all the acquisitions to kind of see what underlying is really nowadays. But yes, anything you can help me with there?

Yes. Well, maybe if I just provide you EBITDA numbers, if that's okay. So we spent GBP 23 million in year-to-date. I think we've shared before multiples in Australia are good. They are accretive levels. So it's about 8x multiple-ish on average, sometimes a little bit less, sometimes a little bit more. That would be about GBP 2 million to GBP 3 million annualized EBITDA. We did -- some of those acquisitions were made towards the back end of the quarter. So you just have to then prorate that.

And in terms of revenue, we've said margins in Australia is slightly better than the group. So you can perhaps solve that, yes.

Andrew?

It's Andrew from Investec. Just following up on those questions actually. One on Australia. Do you have a sense what the rate of the market consolidation is there? I know the presentation says you're sort of 15% to 20% market consolidated. And what I'm trying to do there is just understand how much runway until we get to a situation similar to where we are in the U.K., right? And then obviously, being an analyst looking further, are there other -- or at what stage do you start to think about other geographies when you're comfortable that Australia is going in the way that you want? So that's question one.

And then just following up on Kane's question on 4% to 8% like-for-like growth rate. Just trying to understand what the drivers are in the same way Kane was. Is that a continued value accretion? Are you continuing in with contextualized care? I'm just trying to think about what the answer is. Is it value, volume, mix? What's the big driver in getting to 4% to 8%?

Yes. And Paul, do you want to start with that part? And I'll pick up the first part of the question.

Yes. I think you pick up a great point around how do you create that value. And we've got a big focus at the moment on client experience. And that's because as a profession, perhaps we've had a great focus on our ability to deliver fantastic care for animals, and I think we need to progress how we give that care to our clients, our pet owners in particular as well and really demonstrate the value of the care that we provide.

So I have absolutely no doubt that our colleagues provide the best clinical care they possibly can. We can absolutely demonstrate that and demonstrate that value to our clients, and that's work that we're continuously doing. So I think that is a big action that we're taking at the moment, driving confidence in the consulting room.

We have our new graduate program now. We have a new consulting skills program, which enables that communication with a real refocus from not necessarily a clinical outcome being the right outcome but shared decision-making, so ensuring that our pet owners leave that room with the absolute confidence they've made the right decision for them and for their animal, which is a slightly different shift potentially to always making the right diagnosis. It's a subtle reframing but it's an important one.

And in terms of the market share and the consolidation levels, Robin talked about the two major groups being VetPartners and Greencross. There's also a smaller private equity-owned consolidator called Vets Central. They're owned by Pemba Capital. So all three of those groups have actually more practices than we do. VetPartners is about 250; Greencross, under 200; Vets Central, I think, over 50.

I think in terms of scale, given the size of our practices, we're probably third in terms of scale. But in terms of consolidation, we think the market is between 15% and 20% consolidated, so plenty of opportunity for continued expansion of CVS. We will continue to be disciplined, though, in that we want those high-quality larger sites because they derisk our entry in that if you lose a vet post acquisition, if you've got a larger team of vets, it's much easier to accrete into. And we've been pleased with the approach and performance so far.

But we definitely see a strong pipeline of further opportunities. In terms of other people consolidating, there is competition for deals but probably less than it was in the U.K. a few years ago pre the CMA process.

Great. So you're not thinking you need other geographies at the moment?

Not yet. But equally, in due course, there may well be further opportunities for growth. Australia was really attractive because it's English-speaking and the approach to clinical care is very similar to the U.K. and the clinical standards are very similar. So it had very attractive features. And obviously, with low levels of consolidation, that was an added attractive feature. So that's not to say there won't be other markets in due course, but certainly not in the short term.

Charles -- sorry, James?

James Bayliss from Berenberg. Just two, if I may. On the online platform, can you just talk us a bit through where you are in terms of the investments you've been making to improve kind of customer click through, the migration to cloud and how you see that then driving a recovery or kind of further performance on that side of the business over the next few years?

And then secondly, in the context of vets up 4.5% year-on-year organically, can you just give us an update on what the kind of the wider backdrop is in the market in terms of recruitment, perhaps the differences between the U.K. and Australia in that regard?

And maybe Paul can pick up with the latter. In terms of the platform itself, we did invest in the first half of the last financial year in improving the Animed Direct website and the kind of customer journey. We have seen an improvement in revenue growth in the second half, and that will continue into the new financial year.

But the market online is tough. We have seen some clients trade down from the premium pet food that we sell online, so the likes of Royal Canin and Hill's, et cetera. And some clients are buying kind of cheaper supermarket pet food. So there's definitely been a trade down of some clients. But we are continuing to invest in that platform, both in the experience for the client but also driving more repeat business as well.

So subscriptions, for instance, is a new feature we've recently added. We will continue to try and optimize that platform. And hopefully, we do see a return to growth in the pet food side as well.

If I pick up on that in terms of the kind of feeling within the workforce, there's no doubt that there still is a workforce shortage. And the Royal College have identified that they anticipate that shortage to become less relevant within the next few years, and we're certainly seeing a continuing improvement in the number of vets working in the U.K. Some of that is an increase in the number of vets coming through vet schools. We have new vet schools that have opened in the last couple of years. And we have larger cohorts of vet students coming through.

Obviously, that's contributing to our less experienced number of vets in the U.K. But we're also seeing through the activities that we undertake around caring for our colleagues that we're seeing better retention within the profession. And in fact, we've seen a much easier recruitment into some of those tougher to staff areas in the country, so a lower reliance on locums, for example. And I think that increase of 4.5% really reflects on that, that actually we're able to recruit into some of these more challenging areas now.

Charles?

Charles Weston from RBC. A clarification question first, please. In terms of the guidance for this year, you said you're happy with consensus, which I think is GBP 141 million for EBITDA. Is that including the acquisitions that you've made in the first couple of months or excluding them?

I mean, I can't talk for every analyst on what's included in the numbers, Charles. I'd imagine it would include some of those acquisitions, yes, is my expectation.

I guess analysts probably don't include the acquisitions that you just announced. So is there...

Some may, some may not. And then they definitely don't include future acquisitions.

Okay. And then secondly, just on the cyber sort of softer comps for the second half, which I think was a couple of percentage points, effectively a tailwind. Is there a tailwind from cyber in the first few months of this year that's giving you a bit of a sort of a head start on a year-on-year basis?

And if you think about the 4% to 8% that you expect in the medium term and the kind of roughly 0 that you had last year, could the like-for-like be sort of halfway in the middle of this year? Where should we be thinking on the like-for-like for '26?

Yes. I think the start of this year, the comp is far less soft than it was in the final quarter. I think the one disruption that we continue to face maybe in the first quarter of last financial year was that our teams are still getting used to their new practice management system. But by and large, that disruption was far less.

The peak period of disruption and, therefore, softer comp was the final quarter when we had the cyber incident and then we rapidly migrated onto a new platform. And Paul can maybe comment on how vets are finding that system now.

Yes. I mean, early adoption is always a challenge. But actually, you really only took 6 weeks to roll the majority of our practice out onto that, so very much within the end of the last financial year and previous financial year. Now we're seeing significant engagement with that. In fact, I think we asked our colleagues now how they would -- whether they would prefer this system versus the previous system. Hands down, they would prefer this system.

It enables a much wider access to client records. For example, if you work in one of our night services now, you can access the records from any of our practices that are sending cases in, whereas previously that wouldn't have been possible overnight. So it's definitely freed up an awful lot for our colleagues. There are efficiencies within that system. So for example, there's a function there which is simply called Forms, which is a really simple way to input your clinical data and to also formulate that into, for example, a discharge sheet. So actually it's now bringing significant efficiencies into practice.

And in terms of the 4% to 8%, we are still confident of returning to that, as I said earlier. We talked about the building blocks to that. The one thing I didn't mention, I guess, is price. We have been quite conservative on price in the last couple of years, as you'd probably expect during the CMA process. But we absolutely believe that clients will pay for high-quality care. And we continue to invest in improving our practices and investing in our teams to provide that continued great care to our clients and their animals.

So with some pricing, the return to consumer confidence, the investment in quality and also making sure that we service the increased demand that will come from that COVID cohort of puppies and kittens, there are a number of building blocks you can see that will hopefully get us back to that medium-term ambition.

And just last question from me, if I can. In the prepared remarks on the video, you said that there was an expectation that there may be U.K. M&A opportunities opening up at the end of the CMA investigation. Have you sort of had conversations with potential vendors already? Is that -- do you envisage that being more sort of trading between the groups or more of a sort of independence, perhaps selling up with perhaps additional pressure from CMA?

Yes. I think probably the latter in that. I suspect there are a number of independent practice owners that may have considered selling their practice and have possibly been frustrated over the last couple of years because we know Linnaeus bought a small group in the Rutland area, but there haven't been many transactions that have happened.

We're all eagerly waiting the CMA findings, and they will apply across the entire sector, not just for the corporate groups. And therefore, we do expect some vendors will want to approach corporate groups and look to sell their practices post CMA process.

We will continue to be selective. We would hope multiples have come down from the peak a few years ago. But we absolutely believe there are U.K. acquisition opportunities. And we have less than a 9% market share. So there are plenty of white spaces in the U.K. where we don't currently own practices or we own very little. And selective acquisitions can certainly augment the practices that we already own.

Thanks, Charles. Sahill?

Sahill from Singer Capital. Charles actually just got one of my questions in there. But just sort of building on the UK acquisition, how should we be thinking about your view on capital deployment going forward over the next few years or so? Because clearly, Australia has got good momentum at the moment. The multiples are attractive. Just sort of help me get a sense of that.

Secondly, where are we in terms of greenfields in the U.K. and the ones you opened a few years ago? Just an update on that would be really helpful and plans going forward once we get clarity on the CMA.

And probably one for Robin. Given last year, there was a lot of cost headwinds and you did really well in terms of improving margins, do you have a sense of what kind of like-for-likes you'll need this year to offset any cost inflation that you're anticipating in the current financial year?

Do you want to start with that one? And I'll pick up the capital deployment.

Yes. So as you rightly say, we faced in some national wage increases last year, some national insurance contribution increases. We said the annualized impact of that was between GBP 11 million to GBP 12 million. It started from April '25, so there's some annualization of those costs. Against that, we have been looking at our cost base.

I suppose the areas that we've been looking at to kind of help drive, there's some efficiency savings in terms of headcount and we've delivered some of that already. We delivered sufficient to kind of offset those costs. There are also some purchasing synergies. We every day look at buying of drugs and make sure that we have the most optimum net-net price. But we actually think there's an opportunity right now for us to drive that harder, and I think that will help offset.

And then we've locked in some favorable kind of utility cost savings. We forward buy our gas and electricity. So those three will offset, I believe, most of the cost inflation. We've not shared kind of a like-for-like guidance number, but I think the kind of the market consensus revenue and the like-for-likes will be sufficient to offset kind of cost inflation, plus those activities.

And then in terms of capital deployment, Sahill, we are in a good position, I guess, in our leverage reduced during the year. And we finished the year at 1.18x. So we have capital to deploy and we will continue to adopt our selective and disciplined investment criteria. In terms of those investments, we absolutely believe there's an opportunity too for further accretive acquisitions in Australia and, as I said, returning to U.K. acquisitions hopefully in this financial year. But we will continue to be selective in terms of the practices we acquire.

We're also committed to improving our existing facilities in the U.K., and that's both the practices themselves and the space both from a client perspective but also for our teams, and also investing in high-quality equipment because obviously that allows us to provide that great care to our clients and their animals. So we will -- the three of us sign off on all investments, and we will continue to adopt that disciplined approach. But we do see options ahead in terms of further investment for growth and we're seeing good returns from that investment at the moment.

In terms of greenfields, we have opened a few greenfields in the last few years. And that, I guess, if we don't see an acquisition opportunity in a certain area we want to expand, that can be helpful. I suspect in the U.K., our focus will be more on acquisitions rather than further greenfield sites. That's not to say there won't be any. But I guess, we do feel acquisitions will be back on the table this year.

Any questions from the call?

So there's no questions from the calls but we do have one from the webcast from Roland French from Penman Securities. How are you incorporating AI or machine learning into the practices and your broader processes? And is there an opportunity here?

Absolutely, there is. And I'll hand over to Paul, who's actually using some of the AI at the present.

Yes. I think we need to probably separate out the AI and machine learning, which is a separate component. We certainly at the moment don't use machine learning from a clinical diagnostics perspective, and that's importantly from my perspective as Chief Veterinary Officer that, at the moment, we don't have sufficient evidence to be secure in the way that, that's functioning. So we're exploring it but not something that we're engaging fully with.

What we are using AI with is support in the consulting room, again, to build in efficiencies. So we have a trial at the moment with a scribing AI function, which will record the consultation so that the vet has to make no notes at all, can fully engage with the owner. And it will then structure the clinical notes in the same format every single time. And it can then also automatically create a note for the owner take away, so what would have, within the profession, be termed at lay person's interpretation of the clinical notes.

So it actually really builds in not just efficiencies in there but enables really great clinical record taking, which can be a challenge in the time frame that we have, but it also allows our colleagues to engage directly with owners and not have to worry about writing those notes at the same time. So that's the key element of AI that's in practices that we are using at the moment.

It's just worth adding, we also already use AI in terms of those processing of invoices through AP. That's something we've been using for some time already.

Brilliant. Any other questions?

That's all the questions from the webcast. Over to you, Richard, for closing remarks.

Yes. Thank you. So first of all, thank you all for joining this presentation this morning, and thank you for your continued support.

I'd like to close by thanking our fantastic team of colleagues because these results are all due to their contribution and significant focus on providing great care to our clients and their animals, and we really appreciate all of their hard work. And I look forward to sharing further success with you all in the coming months and years. Thank you.

Welcome to this presentation of CVS Group's full year financial results for the year ended 30th of June 2025. And I'm Richard Fairman, CEO. And later, you will also hear from Robin Alfonso, our Chief Financial Officer; and Paul Higgs, our Chief Veterinary Officer.

I'm delighted to report on another successful year of growth across our group with improved U.K. operations and continued expansion of our platform in Australia. We have successfully navigated some significant challenges over the past 12 months, and the strong market fundamentals remain attractive. We entered the new financial year with a strengthened company, which is well positioned for further success.

Revenue increased by 5.4% to GBP 673.2 million, following a start to the year that was impacted by softer market conditions in the U.K. with like-for-like sales growth of minus 1.1% for the first 6 months. It was pleasing to see a significant improvement in the final quarter, leading to positive full year like-for-like growth and improved trading, which continued into the first 2 months of the new financial year. Adjusted EBITDA increased by 9.4% to GBP 134.6 million from both acquisitions and disciplined cost management and adjusted EBITDA margin increased by 70 basis points to 20%.

The sale of our crematoria business in May 2025 was at an attractive 10x EBITDA multiple and the capital generated from the divestment provides additional firepower for continued selective organic investment in the U.K. and expansion in Australia at multiples that are value accretive to the group. The crematoria business has been treated as a discontinued operation and has therefore been excluded from the revenue and EBITDA numbers shared today, including the comparatives for the previous financial year, which are now shown for continuing operations only.

We delivered improved adjusted operating cash conversion, which at 76.9% for the year is ahead of our stated target of circa 70%. In light of the strengthened operating cash flows and the proceeds received from the sale of our crematoria business, net bank borrowing decreased to GBP 131.4 million at 30th of June 2025 and leverage reduced to 1.18x. We completed a further 7 Australia veterinary practice acquisitions in the financial year, comprising 15 practice sites and a further 2 acquisitions since the year-end, comprising 8 practice sites, bringing our total footprint in Australia to 51 sites. It is also pleasing to see an improvement in both our client and colleague net promoter scores, which Paul will expand on later.

We are also expecting to have further clarity on the Competition and Markets Authority review with the publication of their provisional decision later this month. We have a clear strategy for growth focused on continued high standards of clinical care, delivering excellent client service and supporting a highly skilled team of colleagues to provide this care and service. I am pleased with the progress made over the past financial year, which positions CVS well for future growth.

Our focus is to provide a great veterinary experience, which we believe is centered around the trust shared between us, the client and their animals. That trust is underpinned by understanding the clients' requirements, the care which is provided and the quality of service. We continue to look at ways to reinforce those values and improve on the client experience. We are confident that this focus on people and clinical care will continue to drive organic growth. This will be augmented through further acquisitions with significant opportunity in Australia and the U.K. post the conclusion of the CMA investigation.

We continue to operate in 2 attractive markets, which offer significant further opportunity. In the U.K., there remains white space where we can augment our current footprint with further high-quality acquisitions following the conclusion of the CMA process. In Australia, I'm delighted that within the past 2 years, we have firmly established our presence and now operate 51 sites across major urban conurbations. Our investment is delivering returns with good like-for-like performance and adjusted EBITDA margins in excess of 25%.

Importantly, we have built on our reputation as a people-focused business committed to high-quality clinical care. We have focused on acquiring larger, high-quality small animal first opinion practices with strong management teams, great facilities and an excellent reputation. As already mentioned, since the financial year-end, we have completed a further 2 acquisitions comprising 8 sites, one of which is the marquee acquisition of Sydney Animal Hospital, a multisite practice group in Sydney, which has a fantastic reputation.

Throughout the CMA market investigation, we have adopted a proactive approach in liaising with the CMA. This is to both help the CMA understand the sector and some of the challenges we face, but importantly, to ensure an appropriate outcome in the best interest of consumers. We have sought to engage proactively with the CMA at every opportunity. The CMA formally extended its timetable in the summer and initially said it plans to publish its provisional decision in September 2025.

In light of this, we consciously decided to delay the announcement of these results so that we could both digest its provisional decision and also discuss the proposed remedies in our forthcoming investor roadshow. It's disappointing that there has been a further delay with the provisional decision now expected in the middle of this month, but we look forward to reviewing this shortly. We will continue to support the CMA in the remainder of its investigation and have advanced plans in place to implement the fine and remedies package, which we anticipate will include joint branding of our practices and the publishing of standardized price list.

I will now pass over to Robin, who will provide an update on our financials.

Thanks, Richard. I'm pleased that 2025 marked another year of growth and a year in which continued investment places the group well for the future. Revenue grew 5.4% to GBP 673.2 million, benefiting from acquisitions made during the current and prior year and like-for-like sales growth of 0.2%. Our like-for-like sales growth is adjusted for working days and on a constant currency basis. It excludes current year acquisitions, and it only includes prior year acquisitions from the same month this year as they were acquired in the previous year. Like-for-like sales performance for much of the year was impacted by softer market conditions in the U.K., most notably within our Online Retail business division and our Laboratories division, which experienced a loss of a major customer.

Our Veterinary Practice division was also impacted by continued economic pressures, the CMA investigation and the COVID-19 puppies and kittens now in their young, healthy adult stage of life. It was pleasing, however, to see a return to like-for-like growth in the second half of the year, and this positive momentum has continued into full year '26.

Adjusted EBITDA grew 9.4% to GBP 134.6 million, benefiting from top line revenue growth and disciplined cost management. Adjusted EBITDA margin of 20% was up 0.7 percentage points versus prior year despite the increase in National Living and National Minimum Wage, alongside increases in employer national insurance contributions from April 2025. CVS estimates the annualized impact of these to be in the region of GBP 3 million and GBP 8 million, respectively, but is confident that cost synergies and growth will help to offset the impact of these on the group.

During the year, GBP 15.1 million was recognized in respect of net research and development expenditure tax credits, which is up GBP 12.8 million in the prior year. Free cash flow increased 22.2% to GBP 72.2 million due to favorable adjusted operating cash conversion, offset by an increase in interest expense of GBP 4.6 million, following an increase in both the cost of borrowing and average drawn debt during the year in support of our continued commitment to invest in our practices and acquisitions.

Operating cash conversion was 76.9%, which was up 6.8 percentage points on the prior year and ahead of our stated ambition of greater than 70% operating cash conversion. With a robust cash generation, coupled with the proceeds received for the divestment of the crematoria operations, only partially offset by GBP 63.8 million spent across acquisitions and capital expenditure, leverage fell to 1.18x with a decrease in net bank borrowings of GBP 36.6 million to GBP 131.4 million. Leverage is well below our 2x target ceiling and provides adequate firepower to continue with our ongoing expansion in Australia. And adjusted EPS of 80.1p was down 3.2p, impacted by an increase in the effective tax rate, an increase in depreciation from capital investment in recent years and an increase in finance expense from increases in both cost of borrowing and average drawn debt during the year.

We continue to invest in our practice facilities, clinical equipment and technology with total capital expenditure of GBP 33.2 million for continuing operations, in line with our Capital Markets Day commitment to invest between GBP 30 million and GBP 50 million per annum. Included in this is our work to modernize our IT infrastructure to support modern cloud-based IT solutions.

Consideration for acquisitions of GBP 30.6 million primarily represents continued momentum in Australia with a further 7 acquisitions of 15 practice sites with performance in line with expectations. The group's short-term expansion focus will be in Australia, where there is a strong pipeline of exciting opportunities, and there's an expectation that U.K. acquisitions may open up following the end of the CMA investigation.

Revenue increased to GBP 673.2 million from GBP 638.7 million, benefiting from acquisitions. GBP 52.1 million of revenue in the year was generated from Australia. The Veterinary Practice division comprises our companion animal, referrals, farm animal and equine veterinary practices as well as our buying groups, Vet Direct and MiPet insurance. This division delivered 6.7% growth in revenue, benefiting from acquisitions.

Performance in the year was impacted by continued economic pressures, the CMA investigation and the COVID-19 puppy and kitten cohort in its young, healthy adult stage of life. It was pleasing, however, to see a return to like-for-like growth in the second half of the year. And as the COVID-19 puppies and kittens age, the more veterinary assistance they will require.

The Laboratories division provides analyzers in practice, which supports testing in-house, for which we supply the reagents for the tests and diagnostic testing services. Revenue in this division decreased 0.6%, impacted by reduced volume of diagnostic testing of circa 14% following the loss of a key client. Concentration is weaker across our remaining external clients and it is pleasing to see a return to growth post that client loss.

And our online retail business had a challenging year, impacted by customers trading down for more expensive clinical and life stage diets and disruption from migration to a new website. I'm pleased to say the momentum seen across the group in the second half has continued into full year '26. We've seen good EBITDA performance with adjusted EBITDA increasing 9.4% to GBP 134.6 million from GBP 123 million, benefiting from increased revenue from acquisitions alongside disciplined cost management. Adjusted EBITDA margin increased to 20% from 19.3%, both benefiting from increased revenue in the year, coupled by disciplined cost management and a GBP 2.3 million increase in net research and development expenditure tax credits recognized.

Employment wage inflation, additional national insurance costs and investment in colleagues resulted in employment costs as a percentage of revenue increasing to 52.2% from 51.9%. And other costs as a percentage of revenue decreased to 6.2% from 6.5% with inflationary pressures partially offset by a GBP 2.3 million increase in net research and development expenditure credit to GBP 15.1 million. The group is targeting further cost synergies and efficiencies to protect adjusted EBITDA margin following the U.K. budget changes in November 2024, which resulted in increased employment costs.

I'm pleased with the underlying progress made across full year '25. As pets age, they will require more medical intervention alongside improved customer experience and potential new revenue opportunities opened up with our new practice management system. We look forward to delivering further growth over the medium, longer term and full year '26 is off to a good start. 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. Our stated ambition is to invest GBP 30 million to GBP 50 million per annum on capital investment and over GBP 50 million on acquisitions, which for now continues to be focused in Australia. The group continues to generate healthy cash flows with full year operating cash conversion of 76.9%, ahead of our Capital Markets Day ambition of 70%.

With robust cash generation, coupled with the proceeds received from the divestment of the crematoria operations, only partially offset by the GBP 63.8 million spent across acquisitions and capital expenditure, leverage fell to 1.18x with a decrease in net bank borrowings of GBP 36.6 million to GBP 131.4 million. Leverage is well below our 2x target ceiling and provides an adequate firepower to continue with our ongoing expansion in Australia. We have committed bank facilities to February 2028. We have also hedged GBP 100 million of debt, swapping variable SONIA to fixed, securing an interest rate, including current margin of circa 5.5% through to February 2028.

We continue to assess each of our investment opportunities against our disciplined investment criteria, ensuring long-term returns remain above 10% IRR. Our investments are value accretive and delivers an attractive return on investment in excess of our cost of capital. Our investment unlocks opportunities, investment in facilities and equipment support retention and ability to attract clinical talent as well as allowing us to provide the care our clients require.

In addition, we've built our new cloud-based practice management system, launching online booking across our companion animal practices with the ability of one-click repeat prescriptions and reminders. We look forward to enhancing the client experience further with technology in the year to come.

I will now pass to Paul, our Chief Veterinary Officer, to update you on our strategic progress.

Thank you, Robin. Across our practices, both in the U.K. and Australia, we are focused on supporting our trusted and compelling client proposition, helping us to provide the best possible care to animals. This trust is based on providing fantastic care for our clients and their animals, ensuring that we take the time to build strong relationships between professionals and owners and show that we care for them and how their experience with us feels. Ensuring that our owners feel the value of this care through transparency and the contextualized care approach and demonstrating that we have a consistent quality of service, where we provide the right clinical expertise in the right way to meet individual owner needs. This approach builds on the clinical excellence of our colleagues and ensures it caters for every owner's needs so that we are the trusted partner for any pet and owner.

We've undertaken various consumer surveys and focus groups over the past 12 months to better understand how U.K. pet owners want to access care for their pets. And although there is a perception of a difference between corporate and independent vets, there was a clear view that pet owners understand that there are benefits when the vet has access to and support from the resources and broad clinical expertise available in a larger group. CVS has an opportunity to showcase these benefits over the coming year, indeed, ensuring that we combine the perceived strengths of both the corporate and independent models can further enhance our client satisfaction, which I'm proud to say excelled further with a client Net Promoter Score now 78.9. We believe our focus on enhancing the client experience and approach to shared decision-making in the consultation room is driving this excellent score.

We're pleased that clients continue to value the service that we provide. Our focus on high-quality but contextualized clinical care, along with investment in our practice facilities, provides a safe and reassuring environment for our clients and exceptional care for animals that is reflected in our strong client Net Promoter Score. We remain committed to our vision to be the veterinary company people most want to work for, and our colleagues set us apart.

As we continue to grow our business, we have once again increased the number of vets that we employed. We've seen an increase in the average number of vets we employed in financial year '25 compared to financial year '24 of 4.5%, excluding acquisitions. At CVS, we are renowned for the support we provide our practice teams. During the year, we launched a handy pocket resource called MiGuide. This clinical resource sits in a well-structured portal that can be accessed easily on a phone. It provides our clinical colleagues with instant access to clinical guidelines, advice on emergency care and tools to support decision-making. MiGuide improves confidence in evidence-based recommendations to clients and most importantly, should help our colleagues to improve clinical outcomes and also that client experience.

Given the challenges across the veterinary sector, alongside the continued negative publicity from the CMA investigation, we are pleased to see that our employee Net Promoter Score improved in the year to plus 3.1. Although we are pleased with this improvement, there is always more that we can do. Myself and my executive colleagues continue to work with our practice teams to improve their experience of being part of the CVS team, and we are looking for a further improvement in FY '26 to positive 5.0. I'm also pleased to say in the backdrop of continued sector scrutiny that our colleague attrition has remained stable over the year, showing that we continue to provide the support our colleagues are looking for.

Our facilities not only provide great working spaces for our teams, but also welcoming areas for our clients. In the year, we spent GBP 33.2 million on capital investment, of which GBP 10.8 million was spent on property relocations and refurbishments. On this slide, we want to demonstrate the benefits of this investment. As Robin mentioned, all of our investment opportunities are assessed against a disciplined hurdle rate of greater than 10% IRR. However, it's not just financial returns that our investments deliver. A practice-wide refurbishment or where required, full relocation can benefit the clinical offering that practice teams and clients experience over the long term.

We typically see larger footprints providing additional space to address the client demand for our services, improved clinical activity, for example, through imaging equipment or dental equipment or endoscopy. These new facilities provide a positive environment for our clinical teams to work in, which not only can improve their well-being, but also attract further clinicians and provide secure business continuity over the longer term. A sometimes smaller investment, but one just as exciting for our practice teams is new state-of-the-art equipment. It's rewarding for all involved to enhance what could be an underserved clinical provision to their local area, potentially improving patient outcomes.

A simple upgrade of an ultrasound machine can transform a team's ability to care for their patients. We remain committed to spending between GBP 30 million to GBP 50 million per annum on CapEx to further improve our facilities, equipment and technology. Our investment provides an opportunity for growth, improves well-being and satisfaction across our teams and provides a pleasant and welcoming environment for our clients and their animals and helps us to deliver individualized clinical care.

Our fourth strategic pillar is that we take our responsibilities seriously. This spans across everything that we do as a company and as a profession. Today, we released our fourth sustainability report, updating our stakeholders on our progress against our 4 sustainability pillars: Care for our planet, care for our people, care for our clients and their animals and care for our communities. Our global team of environmental champions have once again helped us to reduce our carbon and energy use. We've created new career pathways across many roles, and we are piloting AI technology to help write clinical notes, which frees up time to focus on clients' needs alongside seeing a sustained reduction in prescribing the highest priority critically important antibiotics.

I'll now pass over to Richard for some closing remarks.

Thank you, Paul. Whilst the past year has had its challenges, we have successfully laid the foundations for further growth and CVS is well positioned to continue to compete successfully and to deliver enhanced value to all stakeholders. Our established platform in Australia is delivering, and we are confident of making further acquisitions in the current financial year in line with our strict investment criteria. We have already completed on 2 further acquisitions this year for a combined consideration of circa GBP 23 million. We are well capitalized with a healthy balance sheet, headroom in both our committed undrawn facilities and our leverage, and we have continued strong operating cash flows.

The new financial year is off to a solid start. And on the assumption of an improved economic backdrop, certainty following the conclusion of the CMA market investigation and as the COVID-19 cohort of puppies and kittens age and naturally require increased veterinary care, our medium-term ambition remains to deliver like-for-like growth of between 4% and 8%. The financial results announced today and our future growth opportunities reflect the continued dedication and professionalism of our colleagues. I would like to take this opportunity to thank them all for their support and commitment to providing great client and animal care, and I look forward to sharing further success in 2026 and beyond.