CVS Group plc (CVSG) Earnings Call Transcript & Summary

Right. Good afternoon, everyone, and welcome to CVS Capital Markets Day. I'm Richard Fairman, Chief Executive, and I'm delighted you're able to join us as we highlight the great strengths of our company, and we outline our plans and ambitions over the next 5 years. So on the next slide, we set out the agenda for the day. So we will start with a formal presentation. And during the presentation, there will be 2 opportunities for you to ask questions. We'll start with questions from those of you here in person. And those of you who joined through the livestream facility can also ask questions through that facility. We will break for lunch around 2:00 p.m. And during the lunch and tour, you can participate in some of the interactive demonstrations at the back of the room. And then this afternoon, we have 2 practice tours. So we are visiting our Springfield Rotherham practice, which is one of our larger first opinion practices and also the size of our relocated Carrick Vet practice at Dobbies Garden Centres in Chesterfield. And then after those practice tours, buses will take you back to Chesterfield train station for your return trains to London. One of the buses will bring those who need to be back here back to the football ground. After the bus tours, you will have name badges actually on you, and you'll all have a time for your practice tour and also color coding for your tour. So for logistical purposes, it's really important that we have the tours leaving here on time, so we'd welcome your support from that. So 5 years ago, we set out a new strategy as a management team at CVS. Our purpose is to provide the best possible care for animals, and our vision is to be the veterinary company people most want to work for. Underpinning this purpose and vision are 4 clear strategic pillars. We recommend and provide the best clinical care every time. And our integrated model allows us to provide joined up high-quality care to clients and their animals 24/7. Our second pillar is to provide -- is to be a great place to work and have a career, and we've spent a lot of time over the last 3 years repositioning CVS as an employer of choice in the sector. We are now seeing the benefit of that from an increase in the number of vets and nurses we employ and also increased colleague engagement as measured through our employee Net Promoter Score. Our third pillar is to provide great facilities and equipment. We are consciously investing in these areas because we recognize the importance of this in our ability to provide great care, but also our ability to recruit and retain the best talent in the profession. And then fourthly, we want to take our responsibility seriously, and that's whether it's driving improved standards of clinical care within the profession in providing more well-being support to our colleagues or in reducing the impact of our operations on the environment. And through a focus on this strategy and these 4 pillars, we've transitioned CVS from a buy-and-bill company to one that's focused on organic growth and is now well positioned to make further investment, and that investment will be across a number of areas, and it will do 2 things. It will drive further organic growth in our business and also inorganic growth through acquisitions. And through our focus on these areas, I've mentioned people as being a key element, and we are effectively a people business. We are fortunate to have a great team of colleagues. I'm now going to show you a video that highlights some of our colleagues. It features some of our colleagues, and it highlights the great strength of our company and also the integrated model. [Presentation]

Hello, and welcome to CVS Group plc. We are an [ integrated ] veterinary group and one of the U.K.'s leading providers of integrated veterinary services with operations throughout the U.K. and also the Netherlands and Ireland. I'm Richard Fairman, Chief Executive Officer, and I look forward to providing an insight into our great company. We operate a fully integrated veterinary model with first opinion veterinary practices at the core of our company. These first opinion practices are supported by our specialist-led, multidisciplinary referral hospitals. Our dedicated out-of-hour centers, our own diagnostic laboratories, our network of crematoria and our dedicated online retailer of food and drugs, Animed Direct. Through this fully integrated model, we are focused on providing high-quality end-to-end care to our clients and their patients 24/7. We continue to deliver our strategy with our clear purpose to provide the best possible care for animals and our vision to be the veterinary company people most want to work for. This purpose and vision are underpinned by our 4 strategic pillars: recommending and providing the best clinical care every time; being a great place to work and have a career; providing great facilities and equipment; and taking our responsibility seriously. This video highlights our integrated model and showcases our great company as shared by some of our talented and passionate team. [Presentation]

So what clearly comes out from that video is the passion of our team of people, and you'll see that passion this afternoon as we accompany you on the practice tours, and that passion is all about delivering first-class quality care to our clients and our animals. Now through our integrated model and our strategy over the last 3 years, we've delivered significant growth. Revenue has increased by 36% to GBP 554 million. We've seen adjusted EBITDA almost double to GBP 107 million. We've seen an improvement in adjusted EBITDA margin to 19.4%, and our focus on providing high-quality clinical care is key to that margin enhancement. And through our focus on people, we've seen a 27% increase in the number of vets we employ. And this strong financial performance on the next slide positions us really well for further growth and to benefit from the favorable market trends we are seeing. We operate in a sector that's proven resilient in past economic downturns. We continue to benefit from the humanization of pets and owners willing to spend more on their care. We're also now seeing improved life expectancy of pets. And as a business that focuses on high-quality care, CVS is really well placed to benefit from that because, clearly, the older pets need more clinical intervention. And we continue to see strong operating cash conversion. We have committed undrawn bank facilities. We have low leverage. And therefore, we are really well placed to invest in future growth. And on the next slide, our strategy remains as relevant now as it did 3 years ago. Today, we are outlining 6 key areas of our ambition over the next 5 years: organic revenue growth of between 4% and 8% per annum; adjusted EBITDA margins of between 19% and 23%; investment in facilities, in clinical equipment, in technology and also in greenfield sites to drive further organic growth and also to support with that margin enhancement; acquisitions subject to our disciplined approach and subject to a minimum 10% internal rate of return, and that 10% IRR more than sufficient to cover our weighted average cost of capital. We are focused on operating cash conversion of 70% and above and leverage remaining below 2x. And through this morning's presentation and the focus on these 6 areas, we will outline our ambition to double adjusted EBITDA over the next 5 years. So the agenda for our presentation is shown here. First up, Ben Jacklin, our Chief Operating Officer; and Robin Alfonso, our Chief Financial Officer, will talk about the investment we plan to make. We'll discuss our capital allocation priorities and also talk through the opportunity we have to enhance margins. Now the investment we plan to make is critical to our ambition to double adjusted EBITDA over the next 5 years. And hence, we will pause for questions at the end of Ben and Robin's session. However, we were keen that you also get to hear from other members of our senior management team. So today, we have Lizzie Mclennan-Green, Small Animal Veterinary Director, who will talk about her career progression within CVS and outline our focus on providing high-quality clinical care in our first opinion practices. Helen Baxter, our Referral Director, will highlight the advanced care we provide through our advanced clinical services network through our [indiscernible] business and all through -- also through our specialist referral hospitals. Dr. Martin Whiting will talk about our people investment and also the career progression and support that we provide to colleagues throughout CVS. And then Graham Dodds will talk about sustainability and ESG. And there'll be a further opportunity for questions at the end of their session. Also here today, we have our colleagues on our Executive Committee, so James Cahill, Director of Clinical Operations; Sara Armitage, our Group Procurement Director; Helen Finney, our Group HR Director; Faye Roth, our Chief Technology Officer; and Paul Higgs, our Chief Veterinary Officer. And a member of our Executive Committee will accompany each of the practice tours. So I'll now hand over to Ben and Robin to outline our investment.

Thank you, Richard, and good morning, everyone. Robin and I are now going to run through the investment opportunities that we see in our business, our experience of returns, and how these will form the building blocks of our ambition to double EBITDA. We'll cover our property refurbishment and relocation strategy, our greenfield investment opportunity and our U.K. and international acquisition opportunities, both in terms of the impact on capital expenditure, but on returns thereon. As a management team, we believe there is still significant opportunity for organic growth within CVS, which will be achieved through our continued focus on the delivery of our strategy. On this slide, we've shared some examples of the organic growth opportunities that exist, and many of these will be familiar to you. Vets and nurses are key to the delivery of our strategy, and we are delighted that we continue to take market share in the recruitment of clinicians into CVS. Our culture of clinical excellence and our people-focused strategy and continued delivery of people-focused initiatives means that we have reduced attrition to the lowest level we've ever recorded. Continued improvement in these areas will enable further organic growth through the delivery of the best possible care to even more patients. A further opportunity will come over the next 3 years with the rollout of a new state-of-the-art practice management system, which we'll cover more on shortly. The system will improve efficiency for our colleagues, improve the experience of our clients and, over time, deliver a range of benefits that will help to reduce leakage across the group.

So we believe there continues to be an opportunity to enhance underlying EBITDA margins. In the left-hand chart, we show a distribution of our practices' EBITDA margins across our veterinary practice division, and the bars represent a count of practices. So the left-hand bar is a count of practices, delivering margin of just below 10%. And the right-hand bar is the count of practices delivering a margin of greater than 40%, the average EBITDA margin being 22%. Bringing that bottom half up to the average, we'll deliver significant EBITDA and EBITDA margin growth. Some of that will be delivered by the focus areas Ben has just outlined, and some will require further investments. My one caveat is that group margins are always subject to mix. In the right-hand chart, you will see our EBITDA margins across our 4 operating divisions, and a good example is that we have an opportunity to invest in our practice management system. That will unlock a number of benefits, one of which is enhanced pet food sales. Increased pet food sales tends to be at lower margin, so the EBITDA improves in absolute terms, which is clearly a positive thing, margin may not. Having stated that caveat, our ambition is to deliver EBITDA margins and improved EBITDA margins of between 19% and 23% over the next 5 years.

On the next slide, as we've shared previously, all the clinical premises in our companion animal primary care estate have been rated against our established operational matrix, which assesses the quality of each premises in terms of how well it serves our colleagues that work there, our clients that use the practice and the clinical work that, that particular premises permits. As you'll see on the graph on the left, the spread of these ratings is broad, and that range and breadth represents the opportunity we have for investment, and that is one we intend to seize. Of those practice refurbishment and relocations that we completed in the calendar year of 2021, we've created outstanding work environments with improved workflows. We've increased the number of consultation rooms that our clinicians operate from. We've provided more dedicated clinical spaces such as dental suites. And where appropriate, we've installed state-of-the-art equipment, including CT and MRI machines. All of this facilitates the delivery of the best possible care for our patients and, critical to that purpose, enables us to attract and retain the very best clinical talent, the majority of whom see the facilities in which they work as a crucial part of the employee value proposition.

The chart in the middle shows year-on-year EBITDA growth. The light blue bar is year-on-year growth within our small animal division. The dark blue bar is the year-on-year EBITDA growth of investments, which were completed in 2021. And you'll see for those investments, the growth was significantly higher than the small animal division, and that growth represents a 12% return on capital employed. So for every GBP 10 million we invest, we expect EBITDA to improve by GBP 1.2 million. With over 200 sites to invest in, we believe there's opportunity for us to invest between GBP 30 million to GBP 50 million per annum to deliver additional EBITDA.

On the following slide, we've shared some more detail on our Springfield practice in Rotherham, which those of you who are here will be visiting today. We acquired this practice in 2006, and since then have continually invested in and developed the practice under the leadership of Senior Clinical Director, William Taylor. Most recently, we've undertaken an extension to install a CT scanner and dedicated dental suite, adding significant capability to the practice. Collectively, the investments we've made since the acquisition have expanded the range of services we can offer, have enabled improved clinical care and have delivered strong growth, outperforming the rest of the group in this period. At the very highest end of our investment spectrum, we're currently investing in a further 2 state-of-the-art multidisciplinary referral hospitals. As previously announced, Bristol Vet Specialists, in which we're investing circa GBP 12 million, will open in the first quarter of 2023. In the following year, we'll see the relocation of our Dovecote Veterinary Specialist Hospital into a similarly state-of-the-art facility. We'd now like to share a short video to show progress to date of our Bristol Vet Specialist Hospital. [Presentation]

Well, that's clearly super exciting. We also have an opportunity to invest in greenfield sites to make the most of our operational know-how and our integrated model. There are no restrictions to where we can open a greenfield site. We can open one up anywhere in the U.K. and indeed across any of our territories. I've included on here a case study for Bracknell, which is a small animal first opinion site that was opened in 2017. And the investment for greenfield site is on average about GBP 1 million, which is less than for a typical acquisition. But unlike an acquisition, which is EBITDA positive from day 1, it takes a period of time for a greenfield site to reach breakeven. And you can see that in the chart in the bottom left. In year 1, although Bracknell reached breakeven by month 12, it was still overall loss-making in year 1. There was then a small positive EBITDA contribution in year 2, and the maturity reached by year 5 where it was delivering a healthy 18% return on capital employed. We intend to open 3 greenfield sites in the next 12 months. And subject to performance, there's potential for us to open many more.

Aligned to both our relocation and greenfield strategies, we've started to consider strategic partnerships for new locations and, as shared in September, have commenced an exciting partnership with Dobbies Garden Centers. Our first relocation opened in Chesterfield Dobbies in August, which is the second site you'll be visiting today. The partnership is a good example of where we can benefit from co-location with the business with similar demographics to our own as well as having access to a national land bank of suitable locations. These practices are full-service standalone veterinary practices with separate entrances, but positioned on a Dobbies site to take advantage of their great parking and great visibility. We plan to open a further 4 practices in Dobbies sites over the next 12 months and thereafter expand our relationship to many more of their 70 or so sites. The investment opportunity continues through our investment in technology, and we shared in September the exciting news of a new partnership with Nordhealth, the leading provider of cloud-based veterinary practice management software, with whom we will launch their new Provet Cloud management system into CVS practices over the next 18 months. This is a dramatic step forward for CVS in technology and opens up a wide range of opportunities. Some of those opportunities are immediate, like online booking, better data collection, automation of billing and a better experience for our colleagues. Additionally, their open API gives us a broad range of opportunities where we can integrate other areas of our business or indeed business areas that don't currently exist such as food sales into the experience our clients have with us. In summary, our ambition is to deliver between 4% and 8% organic revenue growth per year, with an opportunity to augment that with further investment of between GBP 30 million and GBP 50 million of CapEx each year.

We also continue to have a clear runway for acquisitions in the U.K. Every practice in the U.K. needs to be registered with the Royal College of Veterinary Surgeons. And if you have a look at the -- our CVS website, you'll see that there are over 5,300 practices. Of those, 55% are currently under corporate ownership. We don't expect that to ever reach 100%. But based on our experience of other sectors, we do believe that could reach 80%. We are not in control of when those practices come to market, but we anticipate over 1,300 practices coming to market in the coming years. The recent CMA ruling, we believe, was helpful for us in that it gives us a clear understanding of how the CMA will look at local market competition in that it will look at the target practice and surrounding practices. It will determine an area around the target practice based on the 80th percentile of customer post codes, and it will look to ensure that the share of practices or share of vet FTE does not exceed 30% within that area. Now if you look at the map on the right, you'll see there's lots of white space across the U.K. and areas where we have limited presence. And indeed, we can acquire a practice right next door to one we already own, so long as we do not exceed the 30% threshold share of practices or share of FTE. We believe we are well placed to win our fair share of those acquisitions, which could considerably improve EBITDA. For example, if we acquired 100 practices, that would be an investment of roughly GBP 375 million. And based on a multiple of 10x, that would add GBP 37.5 million to the bottom line. We also have a strong track record of delivering value and growth within our acquisitions. On this slide, we've included a case study of Newnham Court, which is a small animal first opinion practice in a garden center location in Kent, which was acquired in full year 2020. We've also included in the bottom left the EBITDA of that practice in the 12 months preceding acquisition and the EBITDA that we delivered in the following 3 years. And you can see we've delivered significant growth, and that's from our ability to focus on top line revenue from the focus on providing great clinical care and on attracting and retaining talent. It's also in our ability to apply our economies of scale and buying power to improve gross margins, typically up to 5 percentage points. And it's also from our integrated model where we could drive additional synergies through our crematoria, our laboratories, our referral network and our out-of-hours network. We typically work to a 10x multiple year 1 post initial synergies. But critically, we look at ensuring that those investments deliver an IRR of greater than 10%, which is above our weighted average cost of capital.

Under the previous management team, CVS expanded into the Netherlands, and we've since grown to have 27 practices there. Although there was a slow start, we believe there continues to be an opportunity for further strategic bolt-on acquisitions, particularly in key major cities where we are currently not present building our scale. However, the Dutch market is relatively small and already approximately 40% consolidated. And therefore, we are looking to new territories to unlock further medium-term growth. We've learned a number of lessons from our expansion into the Netherlands. Further international expansion would be supported by a strong local management team, and entry would be via a high-quality acquisition with a very clearly identified opportunity to grow the size of the group thereafter. On this slide, we've included some data on potential international expansion opportunities, which could provide exciting growth for CVS. Spain, although a smaller market, is unique to most European countries in that annually it qualifies a surplus of vets. There are a couple of small platforms forming, and we see good collaboration between U.K. and Spanish vets as a key opportunity there. France, where we see good collaboration between U.K. vets as well is also attractive. It does have regulatory challenges where our practice has to be majority owned by a local vet, although there are examples of corporate ownership still happening through shareholder agreements and preference shares. Multiples in France are higher for key practices, albeit we believe these will come down over time for additional bolt-on opportunities. Of these 3 European countries, Germany is by far the largest market, but is perhaps the least attractive. Germany has some very large referral hospitals, but is supported by highly fragmented market of small 1 or 2 vet practices. Our experience tells us that we see more opportunity with larger practices of 4 or more vets, which can support career development, investment in clinical equipment and the delivery of the highest possible quality of clinical care. There are also other English-speaking countries, such as Australia and New Zealand, which have similar regulation to the U.K. and strong collaboration with U.K. vets and are in their early stages of consolidation. We have a dedicated acquisitions team assessing these opportunities to make sure that we make the right next step.

So we have an ambition to double EBITDA over the next 5 years. We believe we can grow organically by between 4% to 8% per annum. We believe we can augment that organic growth with additional EBITDA from investment in our practice facilities, greenfield sites of about GBP 30 million to GBP 50 million -- with an investment of between GBP 30 million to GBP 50 million per annum. And we believe the balance can be delivered through acquisitions, either in the U.K. or in other territories. We'll continue to apply financial rigor and discipline to those investment opportunities, ensuring that our IRR is greater than 10%, which is above our weighted average cost of capital. We are also highly cash generative, and we continue to be, and our expectation is that those investments, depending on timing, investments will be funded, partly or if not fully, by cash that we generate internally and by debt that we currently have available to us, maintaining a leverage of below 2x.

So just to conclude, our key takeaways from this morning are that our ambition is to deliver organic revenue growth between 4% and 8% per year, adjusted EBITDA margins across the group between 19% and 23%. We intend to make investments in practice facilities, equipment and technology to support this organic growth and margin enhancement. We'll make acquisitions subject to our disciplined approach in a minimum 10% internal rate of return. We expect to deliver operating cash conversion of 70% or higher, and we anticipate leverage remaining below 2x. And our ambition is clear, to double EBITDA over the next 5 years. That marks the end of the first section of our presentation, so I'd now like to invite Richard back to the stage for the first section of our Q&A.

So can we start with questions in the room, please? Charles? [Operator Instructions]

Could I just ask about the step-up in the investment plans? Is this because you're getting more confident, you've got more experience of investments in some of your existing businesses? And would this have happened sooner if it hadn't been for all the disruption of COVID?

I think it would have happened sooner if it wasn't for COVID. We are very confident with the returns we can get from this investment. We've also seen our balance sheet strengthen clearly in the last 3 years, and we are really well placed to invest in that growth. We've got committed undrawn bank facilities. We've got cash on balance sheet, and we have very low leverage. So we are ambitious. We are keen to invest. It might be worth then just talking through the improvements we've made to our property team because that's also, I guess, a key factor in our plans.

Yes. I think it talks to the question, Charles, around timing because there's certainly a lead time with some of this. Some of that's involved in us have been scaling up our property team and also the strategic partners that we work with to deliver on the design, build, finding locations for us. So there is certainly a lead time, which post COVID leaves us to be able to say this now. But we now have a really strong property team, really strong partners and are well placed to deliver that investment.

And if I may allow to follow up, is that -- is -- do you think differently about the playoff now between organic investment and M&A? Or is it more amount -- about the level of balance sheet capability you've got?

I think it's a combination of things. So we, as a new management team that formed 3 years ago, wanted to focus on organic growth and, I guess, improve some of the underlying factors within the business. And we've outlined the strategy 3 years ago that we shared today again, and we believe is relevant as now as it was then. Another strategy we've clearly focused on people, on clinical care, and we've seen good organic growth from that. But we are well positioned and very confident to achieve additional growth from further investment. I guess, we're fortunate to have so many opportunities to invest. I think, Robin, I think the discipline around financial returns and the IRR of 10% minimum will remain, and that's important to but we are very confident with the growth in the sector and the opportunity to expand. Kane?

Kane Slutzkin from Numis. If I just take you to Slide 10, you've got the sort of distribution of -- maybe it's for the distribution of margins. I was just wondering, is there anything in that less than 10% that sort of won't make it up and up the chart, and effectively, you would look to maybe clean up at some point? And how many of your practices do you think could be in that bucket where maybe they don't make it if you were looking at a way to sort of improve the overall margin is?

Yes. I don't think there'll be many that won't make. I think we outlined in the presentation that there are 2 elements to improving that margin. One is from the kind of organic growth opportunities and focusing on clinical care, using our hub clinical leads to help with these practices to improve their diagnosis and providing care within the consult room, and some of that will be delivered through our ability to attract and retain talent. And you're right to outline, some will need investment that we've kind of outlined around capital investment to either improve the facility. We're not able to improve the facility in its current location and to relocate that practice into a purpose-built facility.

[indiscernible] about the focus over the last few years around branch practices on?

Yes, I was just going to say that. So you'll have seen that actually over the last few years, we have closed a number. We haven't generally just closed them in isolation. Relocations represent an opportunity to move some of the very smallest branches into more significant locations. Historically, consulting only branches, as we would call them, were a major part of the veterinary profession where you would have a branch that really had only a very narrow level of service. We've moved away from that in CVS because clinical talent generally wants to work with other clinical talent in a more full service environment. So we've closed a number of practices and consolidated them over the last few years. And there may be further opportunities to do that as we relocate. But I'd say we probably closed the major change that we've done.

Andrew?

It's Andrew Whitney from Investec. Just kind of follow up on Kane's point on margins. You've got the 70 greenfield sites with Dobbies. You've got acquisitions. You've talked about the pet food a bit. Each of those things feel like, at least initially, there might be a bit of margin pressure as those things roll out. Is there a risk on the downside to that 19% as we go on this journey and then you get to the upside later on? Or do you think your worst case is you sort of maintain the current margin, and the mix in business actually drives the organic margin up, offsetting any dilution that you get?

Yes. So I think the investment opportunities are across a number of areas. And actually, on the Dobbies side, initially, they are relocations of existing practices, so they shouldn't be margin dilutive. Those relocations are improving margins as we relocate existing practices to better facilities. As Ben touched on, though, we have access to all Dobbies into sites across the U.K., and that may include some greenfield start-ups in Dobbies locations in due course. And clearly, they will be margin dilutive in themselves to begin with. But we have plenty of opportunity to invest in growth. And I guess, key to margin enhancement, and the graphs that Ben and Robin shared, there's a correlation clearly between the quality of the facility and the performance of that practice. And key to that, I guess, is to provide great care, you need vets and nurses, and it's far easier to recruit and retain vets and nurses in better quality facilities. And clearly, to unlock the full potential, you need great equipment as well, and that's why there's no kind of secret of our investment in facilities is key to that kind of organic growth and the margin enhancement. Some questions behind you, Jeff.

It's Michael from Half Sky. Can you comment a little bit on just the availability of vets today, especially versus sort of when they were added to the shortage list in late 2019? What have -- what has happened to wages? What are you seeing right now in the market?

Yes. So the market for vets in the U.K. has been challenging for quite a long time, and that hasn't very materially changed actually over the last few years. What we've been able to do is outperform the market, take more market share, despite the fact that the U.K. market has been relatively flat. There have been a number of challenges over the last few years. Brexit was one of them, and then actually probably more impactful was coronavirus travel restrictions because we traditionally recruit a number of veterinary surgeons from Europe who are used to traveling regularly home. That became difficult. The event going back onto the shortage occupation list is very helpful, and we used to have, prior to 2011 when the vet was taken off that list, a lot of Australia and New Zealand, South African vets working in the U.K., and we certainly had a period of time where that just disappeared. We haven't really benefited yet from that change because, post 2019, we were straight into COVID and travel restrictions. And clearly, some of those countries were the most affected. So that is helpful for us, but it hasn't yet been a benefit. Perhaps, the other 2 things I would say a much bigger benefit to us going forward from a labor market perspective are the number of the vet students qualifying in the U.K. is that dramatically increased. Today, we qualify just over 1,000 vet students in the U.K. each year. Over the next 8 years, that will double, and that's a combination of new vet schools opening, of which there are 3 already, and also vet schools increasing their numbers, including, for example, Nottingham a double intake as of 3 years ago. Clearly, there's a fairly long time for those graduates to cook and turn into qualified vets 5 or 6 years. But over the next 8 years, the number actually coming out of vet school will double, and that will be very material in terms of the supply into the U.K. The other change on the horizon is the fact that the Royal College have consulted on legislative reforms on the Veterinary Surgeons Act, and that will enable nurses to do much more in the veterinary clinic. Actually, the list of things that nurses can do in a vet clinic is very restricted and restricted by the 1966 Veterinary Surgeons Act, of which reform has been recommended. What we don't know is how long that will take to actually go through parliament and become real. We clearly respect the fact there is significant queue for legislative change post Brexit. So we don't know when it will happen, but when it does, that will be certainly significantly meaningful. In terms of your question around wage inflation, we haven't seen very significant wage inflation amongst our clinical staff. We've always sought to try and pay above average because that's what we're about. We're about the highest quality come to us if you want quality, not if you want low-cost care. But actually, we find some of the most meaningful things we've been able to do for our vets and nurses and our other colleagues is to create the work environment that people are looking for. And facilities and equipment are really high on that list as well as a work-life balance. We've invested a lot in making sure our colleagues have the flexibility to take significantly more time away from work, if they want. We've increased the standard amount of holiday we allow people to buy and sell holiday, and a range of other initiatives to make sure that when you come and work for CVS, it's a clinically focused culture. You're going to work in good facilities, and the package we offer you is broader than just salary and reward because actually that's one of a range of things that are important to people.

It's Rob Chandler from Berenberg. Just interest in your thoughts around the international opportunity because I think interesting to hear your lessons learned from the Netherlands expansion. Largely, it was too fragmented, too small, the local management wasn't there, which is too hard to get the scale. So when you look at the fragmentation level in Spain, France and Germany, they are very fragmented markets. Does the opportunity exist to go and buy a decent bigger asset, which is a multisite operator culture? Or do you think these can turn into professional CVS organizations? Or do you think there's kind of hard yards to go in terms of the first round of consolidation to get there first?

And that's partly why I guess our focus has probably evolved because when we first started looking at European expansion, Germany was the obvious market because, as Ben said, it's by far the biggest, and it had the largest number of practices and average spend per pet. It was probably closest to the U.K. But Germany certainly doesn't offer that opportunity at the moment because it is so fragmented, and there aren't any kind of practice groups of scale that we can acquire. And that's why, increasingly, we've looked at other markets, including Spain and France and other English-speaking markets because there are certainly assets of reasonable scale with strong management teams that we are aware of and potentially do give us the opportunity to have that kind of strong platform from which to grow. We haven't rushed into an international expansion yet because we want to focus on buying the right asset with the right management team and be very confident of that growth opportunity to come. So this is not a vanity project, but we do see opportunities for good growth.

And then just a follow-up question on the kind of greenfield expansion, and you outlined the economics very clearly. So you said 3 this year and then kind of left it vague on how many more. Is this something -- firstly, is this something other competitors are doing? And secondly, do you believe that will displace other practices and, hence, reduce the total number of assets in the market?

So as you say, we're going to do 3 over the next 12 months and closely monitor. We've done 7 in the past, but the 7 we've done have been a real broad range of everything from referral hospitals to branch sites to brand new sites that have out of hours to those that don't have out of hours. I think what we've established is the type of practice that we want to roll out, and we're going to do 3 just like that this year. We certainly could do more. Clearly, there is an EBITDA strain in year 1, and the major limiting factor with greenfield is actually finding the right location because if you think of our wish list, with sort of 2,500 to 3,500 square feet ideally on a single level, loads of parking and great visibility, that's not that easy to just come across. So the limiting rate -- the rate limiting step is often finding the locations. But we certainly could do more. But clearly, slightly talking to Andrew's question around margin dilution, we will be cautious in how many we do because we don't want to do a great big bucket of them that are all EBITDA negative in year 1. I'm sorry, there was a part about our competitors. So our -- the majority of our competitors are private equity owned, and they're not doing greenfield sites, and I don't think it's probably in their plan to do so. Vets4Pets clearly have grown largely through doing greenfield sites. Although a very different model, they're operating small clinics and largely in the back of their retail sheds and a very different model to what we're looking at, which is full-service veterinary clinics in standalone units.

Stephen English, Stellar. In terms of peers, just rising cost of interest rates for the more levered and also the CMA mean that your peers have already run out of white space, I'm wondering if there's going to be a spillover from lower multiples. Or is it less about the multiples and more about extra availability of that practices to acquire now?

Yes, it's a good question because we are aware that our private equity-owned competitors, and particularly people like IVC Evidencia and VetPartners, they've been the most -- the 2 most aggressive acquirers of practice over the last 5 to 10 years. And we know they are highly levered, sort of 7 or 8x levered, we believe. Now clearly, they will have a big proportion of their debt protected through swaps and interest rate protection. But ultimately, those will run out. And hence, they will inevitably face higher cost of capital. Whether that really reduces competition in the sector, it might well be, and we are starting to see some signs of them being less active in the U.K. given their existing scale. But there are others that will replace them, we expect. So we're not expecting multiples to come down, but we are confident with the returns we can get, and Robin talked through some of those returns from our ability to drive revenue growth and also generate synergies post acquisition. And the Newnham Court example is a great example of us doing just that. Any more questions from the floor? Are there any from the live stream yet? Okay, okay. There's a further opportunity -- sorry, a question here.

Karamanoli from RBC. Just a followup on the acquisitions. In -- for Europe, you said that there is moderate multiples and high. Can you give us an indication of what that means? And as -- also in terms of synergies, my understanding is that when you do European acquisitions, there are no synergies. Is there any potential opportunity that you could see synergies across the different countries?

So maybe I'll start with the synergies question. You're right that we don't access the same synergies as in the U.K., but there are opportunities to access some of those synergies straightaway, principally around procurement. Our Group Procurement Director, who's here today, has worked very hard. On the drug companies, you prefer to operate in country silos and not recognize our global spend and has made lots of progress there for us when it comes to our Dutch and Irish operations. But clearly, we don't get the same synergies there as we do in the U.K., but there is some. Broadly, the other synergies we have are businesses that we own, so laboratories, crematoria. And we see no reason why in due course those countries couldn't equally accommodate those kinds of businesses. it's not likely to be the first step, clearly. But getting to a scale where we can operate those businesses would certainly be part of the ideal plan. I don't know if you want to comment on the multiples, Robin.

I think, anecdotally, I mean, it's anecdotal, some of those multiples are higher in those European markets, particularly in France. And I think the -- for a platform, even if we do face slightly higher multiples, the expectation is that multiples will come down with a strong pipeline of future acquisitions at lower multiples. So actually, the blended multiple and the returns that we get would be in line with our current minimum hurdle rates.

Great. Well, there's a further opportunity to ask questions at the end of this session. So thank you for your questions so far. So we'll now hand over to Lizzie Mclennan-Green. So Lizzie is one of our Small Animal Veterinary Directors and comes from the North of the U.K. And she will talk through our focus on providing high-quality clinical care in our first opinion practices and also outline her career progression within CVS. Lizzie?

So thank you, Richard. As has been mentioned, my name is Lizzie Mclennan-Green. And today, I am going to explain how best clinical care and careers support organic growth within CVS. My entire career has been spent with CVS, so I thought I would start a little bit about telling you about me. So my journey to be a vet came, like most, at a fairly young age. I don't come from a farming or veterinary background, but I was always surrounded by animals. And by the age of 10, I was fairly resolute. In 2002, I went to that school in Edinburgh. I spent the next 5 years in and out of this fabulous building having the time of my life. I graduated in 2007 and was so excited to join a wonderful profession. But the truth was that after 5 years of vet school, I honestly haven't given very much thought to my future. I guess, I'd assume that my first job would be as an expert. But after coming across a really well-written job ad, I jumped into small animals with both feet. I joined the team at Springfield Veterinary Group in 2007. By doing so, I became part of team CVS. The main hospital site that you can see here in the picture is one of the sites that you're going to visit today, and it's actually been a veterinary practice since 1964. And it was one of the first recognized veterinary hospitals in the U.K. It has changed a little bit in that time frame, you'll be pleased to hear. So my role during that first year was to provide holiday cover. It's not something that we would necessarily encourage today. But it was a fantastic opportunity for me to see how lots of other vets did their job and gave me a real sense of the kind of vet that I wanted to be. I loved it so much that in 2008, I became a permanent member of the hospital team. I could see that there was real opportunity to improve the quality of service to our patients and our clients by introducing consistency in the provision and communication of care. I was supported to take on a new role of inpatient vet, allowing me to take ownership of what at the time was a relatively small, but important service. Ownership led to growth and an increasingly busy hospital. Whilst around me, the rest of the team are working hard on bringing other great services such as endoscopy, laparoscopy, dental radiography that you can see here, and advanced orthopedics. I myself became an advanced practitioner and introduced a visiting CT service. And a new role as head vet gave me the opportunity to develop my people and clinical leadership skills. And I was really proud to be able to lead the team to hold all 6 CVS Awards Outstanding, making us only the second site in the U.K. to ever do so. But as they say, all great things must come to an end. My husband was offered a unique opportunity. And in 2018, we moved to Glasgow. Thanks to the positive and approachable nature of local and regional leadership, leaving the business was never really in question. I was supported fully in my decision and was given the opportunity to take on a Senior Clinical Director role. I combine this with the newly created hub clinical lead role in 2019, and this allowed me to focus on my passion for promoting great care in the first opinion setting and helping colleagues find the fun and excitement in veterinary practice. In October 2020, I gave birth to our now 2-year-old daughter. And being able to step away from work and focus on that first year of her life was not only encouraged, but supported by our industry-first enhanced maternity benefit. Feeling comfortable to take this career break allowed me the time to settle into motherhood, standing me in great stead for returning to work full time and balancing my work and home life commitments. I became a small and multi Veterinary Director early this year and along with colleagues Mark, who is also here today, now lead the Hub clinical lead team. we're a group of 15 highly experienced veterinary surgeons who work regionally to drive clinical growth across our small practices. It's a varied and exciting role, but a law of practice remains, and I continue to work the clinical vet 1 day a week alongside my vet director role. So working for CVS has offered me the opportunity to challenge my expectations, we consider what is possible and reach goals I would never necessarily have thought attainable. Getting off to a great start is so important. The first job has the possibility to set the direction for the rest of your career. Our industry-leading and well-established new graduate program, nurse training practices and apprenticeship scheme has just been joined by an accelerated emergency critical care program, developing, nurturing and retaining our own talent supports organic growth by fulfilling our commitment to delivering the best veterinary care. The pathway to progression is clear. Regular checking conversations provide constructive, positive feedback and support all colleagues to explore their career development aspirations. The broad variety of businesses uniquely found in the CBS portfolio means that as well as first opinion and specialist clinical work, colleagues can consider careers in pathology and labs, research, procurement, marketing, product development and clinical and business leadership, to name a few. And well-being is so important. Having a happy and healthy team is key to being able to provide great care to our patients. Supporting this are our dedicated out of hour services, flexible working opportunities and our culture of psychological safety. Long-term retention of vets and nurses is 1 of the major challenges facing veterinary employers today. This is not simply highly skilled clinical staff going to work elsewhere, but permanent loss from the profession. Being able to provide flexible working alongside support for family life through part-time and job share positions as well as a diverse range of career opportunities all whilst being able to work for the same great company is what I believe sets CVS apart as a great employer. The commitment to team well-being and constant focus on our people as our biggest asset is setting the standard for the wider veterinary profession. Patient Care Index is a KPI that measures the high quality of the care that we give to our small animal patients. It matters because it correlates directly to the volume of investigation and targeted treatment undertaken. And quite simply, the more we understand about the disease process, the better we can manage the problem and improve the outcome for the patients. Patient Care Index also correlates well with average transaction value. and ultimately drives practice commercial performance. Our practices PCI is currently distributed around a high benchmark of clinical care. And this gives us opportunities to further enhance that care across our estate. In addition to the recent growth in domestic pet population and ongoing humanization of pets, we have an increasing age pet population with committed owners who want to provide the best possible care to their animals. PCI improvement is the focus of our team of health clinical leads who shared their experience and knowledge with our clinical teams to further enhance care quality by supporting a recommendation culture and driving continuous clinical quality improvement. In the following case study, I want to share with you an example of what focus on PCI improvement can look like from a performance point of view. This is a single site example that this progression has been replicated many times across the estate. So Champion Vet is a 3-site practice who joined CVS in 2017. Hub clinical lead involvement with the practice began in January 2019 and focused on promoting a best practice approach to each case by creating a practice recommendation culture supporting progression of clinical staff to maximize clinical equipment, including ultrasound and radiography and introducing new services such as laparoscopy. During this time of focusing on best practice and higher-quality service provision, revenue has grown by 50%. Whilst in the same time period, PCI revenue has increased by 96%. And this has supported EBITDA to exceed 32% in this practice. The good news, however, is that our work here is not done, and we still have some way to go. PCI opportunity for this practice sits closer to 44%. But constrained by current facilities, this practice sometimes struggles with meeting client demand. The iBox site is due to relocate in mid-2023, and the other 2 sites are scheduled for a media property work, which will allow increased service capacity. So I would like now to introduce my colleague, Helen Baxter, Director of Referrals, who's going to talk to you a little bit more about advanced clinical care.

Thank you very much, Lily. I joined CVS nearly 7 years ago after getting my fix of James Harriet style mixed practice. And it was the offering of a surgical position at CVS' biggest first opinion hospital that enticed me to the company. I was mentored through a post-graduate certificate and expanded my clinical interest in advanced soft tissue surgery. And I was further supported to develop my leadership skills becoming a senior clinical director. I took a bold move with the largest first opinion hospital and supported by my team of practice leaders and the senior leaders of the business, we moved all of that routine first opinion work out to a redeveloped branch site. What this allowed us to do was allow our clinicians to focus fully on their interest and offer discipline-specific referrals alongside a 24-hour emergency critical care center. As I'm sure you can appreciate, there were a few eyebrows raised at this, but they did come down, achieving an adjusted EBITDA margin of 26.8%, which came up from 18% in just 12 months. Our attrition decreased. We grew from 16 to 36 vets within 18 months. And our Net Promoter Score or client satisfaction score increased as we were able to offer a higher quality of care and an increased service offering to all of our clients. Our employee Net Promoter Score increased, and that's not surprising because the majority of vets just want to continue to learn. We are tasked by our governing body every year to do a set amount of learning or continued personal development, which needs to be recorded. And ultimately, all that just want the best treatment for any animal that's under their care. They want to be able to fix that broken leg, not just offer amputation. As my clinicians in that hospital setting gained in confidence, skills and knowledge through exposure to more complex cases and increased utilization of their skills on a daily basis, that all-important PCI metric that Lizzie spoke about went from 42% to 60% and continues to grow to this day in that specific hospital. Next slide, please. This graph over on the left there shows the additional revenue when our advanced practitioners were given the opportunity to utilize their skills 100% at a time, an increase of 60%. And the graph on the right shows the difference in PCI with our main groups of clinicians, which sit within our First Opinion business. Our general practitioners to those who undertake and are supported by CVS to undertake a post-graduate certificate and to those that go on to achieve advanced practitioner status, a recognized status in a specific discipline by our Royal College of Veterinary Surgeons. Lizzie is a great example of somebody who has achieved an AP status in medicine. The group at the far right-hand side of that graph, our ACSN network, our Advanced Clinical Service Network, are a great example of people who are able to utilize those advanced clinical skills all of the time. They are a group of roving or peripatetic clinicians who go into all of our first opinion practices offering the opportunity to upskill and use their advanced skills all of the time. In January of this year, we redefined that vision and set it to offer a unique clinical career pathway for our vet and our nurses continuing to be advocates of excellent patient care while continuing the development of our first opinion, our lab and our specialist divisions. So how did we action that? Well, we've doubled the size of the peripatetic team to date. We've recruited our first nurse into this role in recognition of our commitment to continued nurse career development and to make sure that we are perfectly placed when that legislation changes with nurses that are willing and ready to commit to those excess skills that they will be allowed to do. And we also offered true hybrid flexibility. So for our general practitioners who have a loyal client base that want to keep that client bond, but have undertaken the next steps of their career and have those advanced skills the flexibility of a hybrid role offers them the chance to utilize those skills and keep them fulfilled throughout their career. So what does this mean for our local practices? Well, we've got advanced practitioners in many of our First Opinion sites. So we invited all 330 of them to be part of a brand-new Advanced Clinical Service Network. The aim of this was to influence, inspire and empower them to improve the utilizations of their skills through peer-to-peer supported disciplined clinical meetings to share ideas clinical knowledge and confidence in building their own certificate led services across the group and accelerating that process of increasing the quality of care that we give career progression and ultimately, that measure of PCI. We know that for more exposure to advanced clinicians in general practice and increasing our clinician's knowledge and the goals that our vets and nurses want to achieve we see increased referral at every stage of the cycle on the left. We know that with our further plans for expansion for the ACSN and also our specialist referral division we will offer a comprehensive referral offering to meet the needs of all of our clients. And it's a skill in itself to know when to refer that case that's in front of you, and very important that you know who and where is best to refer to. Not only do we allow our clients and patients access to our skilled clinicians, but we also allow our general practitioner colleagues and younger vets the opportunity to follow their cases to allow those advanced practitioners to come in as a surgeon to scrub in alongside somebody who is more experienced, or the opportunity is encouraged to go and visit our specialist referral hospitals to see those that are at the very top of their profession and to be inspired to follow in their footsteps. We have focused referrals to our specialists, giving them time to devote to research and the development of state-of-the-art treatment within our specialist facilities. And let's not forget that it is these specialists that define what good quality and best quality patient care is. And it doesn't stop there. Our Vet Oracle team of specialists continues to expand. This unique service provides fast, high-quality care with interpretations of CT, MRI, radiography and ultrasound images, with a global reach and a particular focus on telling neuro imaging, the expert skill of this team is vastly sought after. And with a great demand and opportunity for continued expansion as leaders in the telling neuro imaging world, we reach all of our 1 continent across the globe. Our in-house team have also branched into Teleoncology, Teleradiology, Telecardiology and Teledermatology, allowing all CVS practices to have at the click of a button specialist input to their cases. They offer a quick turnaround, meaning that answers and advice can be sought in an appropriate time frame with the client stood in front of you and a personal service. They offer the opportunity to improve the advice on image quality that we obtain within our practices, contributing to that continued personal development that we spoke about earlier. And it really is practical virtual assistance with a specialist virtually over your shoulder while you perform an endoscopy procedure, guiding you to those next steps of your advanced skills. It helps to increase our PCI as a direct results of the interactions between our general practitioners and our specialists and helps us to provide that best patient care. As our purpose is to give the best possible care, this can only be achieved by our clinical colleagues being kept up to date with the latest advancements in what can be done. And by adhering to our strategic pillars, there is so much more opportunity to continue the improved communication links between our own general practitioners, our advanced practitioners and our specialists. I have no doubt that this will lead to continued excellence in care that we offer our patients and ever-growing eNPS and career development, which is truly unique in our clinical setting. So I thought I would show you a case that aims to highlight what I mean here. But first of all, I'm going to ask you a question, can anybody identify what the foreign body is in this abdomen that was eaten by a 5-year-old labrador who presented with vomiting and diarrhea? Any guesses? No? Well, it was a duck. And I use this example, the patient did extremely well. In fact, after 30 minutes of this radiograph being taken. The duck, shall we say, passed naturally, and the patient left the hospital feeling significantly better. But when you are a clinician, and there are day-to-day challenges or things that you are likely to have never seen before to know that you have the ability to send that image to our Vet Oracle team to ask a local member of our Advanced Clinical Service Network or indeed to fully refer that patient to a specialist for the best quality of patient care. That's really important to the well-being of that clinician to know that, that support is out there for them at every step of the way, no matter what comes through their door. With our specialist referral division, we also continue to grow our centers. We continue to invest heavily in our specialist sites where advances in veterinary medicine continue day in and day out. Our CVS specialists are truly at the cutting edge of the industry, working in not just the clinical capacity, but research capacities as well. There are huge opportunities for us to develop our residency and internship routes, and we have room to expand the training of specialists for the future to help not just with our own succession planning, but to complete our internalized referral offering. Our new Bristol Vet Specialist Hospital will have the first stereotactic linear accelerator in the Southwest delivering state-of-the-art radiotherapy to our patients, and our second hospital will also be equipped with this stunning new technology, providing the best possible quality of care to our cancer patients and improving the quality of life of pets at perhaps end-stage cancer conditions. A huge educational opportunity exists within the industry for us to benefit from these advanced treatments and to pass on our knowledge, and CVS will continue to be at the forefront of that with exceptional facilities and exceptional diagnostics to support our case load. With the continued focus on our purpose and vision underpinned by our 4 strategic pillars and future growth through our general practitioners, our ACSN network and our specialist division, we truly are offering a unique career pathway. We're offering a commitment to continued career development with flexible opportunities at every stage whilst always aiming to improve the quality of the patient care that we give. Thank you very much. It's my great pleasure to welcome Dr. Martin Whiting, who is our Director of Education, who will talk to us a little more about how we're continuing to invest in our people.

Thank you. Thank you very much, Helen. Now I joined CVS as the Director of Education following a career in academia, clinical practice and the civil service. The majority of my time was at the Royal Veterinary College in London, where I was appointed the world's first lecturer in Vetmedics and Law. And during my time in academia, I've taught nearly 3,000 vets and nurses across the U.K. and are passionate about education and people development. I've supported the profession and CPD at the national and international level. And as a specialist vet, my discipline is in animal welfare, which is a fundamental tenant of the veterinary professions. But this subject sits at the core of what we do at CVS as our purpose is to find the best possible care to animals. The strategic purpose sets CVS apart in the veterinary sector as it aligns the core motivation of our vets and nurses whose constant endeavor is to animal welfare. And what attracted me to CVS was a combination of this purpose with our focus on the people. Our vision to be the veterinary company people most want to work for means we focus on our people's lifelong development, and we commit to their growth. The commitment to nurture staff development and the focus on patient care index, drew me as an academic and a passionate educator here to support those exceptional clinical teams. Our education team has had substantial investment over the last 4 years, and it's grown to 30 strong team of vets, nurses and learning designers. And this includes our own accredited nursing school. We build our internal training through a unique learning portal called Knowledge Hub and it's a mix of webinars, blended learning and face-to-face training. We have a state-of-the-art flexible vet lab training space, and this allows us to run practical courses such as dentistry or surgery, upskilling our clinical teams in a safe and highly cost-effective environment. And our industry-leading webinar series and e-learning packages have delivered upon the many specialists that come from all of our referral hospitals, they cover all veterinary disciplines. Our teams are supported 24/7 to this bank of hundreds of resources. They were substantially grown during lock down. But this means that no matter what your pattern you work on, whether you're a minute vets or an ambulatory service, our learning is available for you. And this highly internalized training means it's much greater cost efficiency. It enables us to quality assure and meet the exacting high standards we have. Rather than costly outsourcing, we leverage this greater value to the learner as part of their benefits package and their CPD allowance, our allowance becomes greatly enhanced. And currently, over 60% of our short courses are delivered internally. To meet our strategic focus on having the very best leaders, we've developed an accredited program for leadership and management, and this continues through all stages of the career up to a Level 7 qualification, and it's alongside our coaching and mentoring program, which is also externally accredited to Level 7 with a network of professional coaches whose services are available to our staff on demand. Our front-of-house teams are supported through much of the trading at Level 2 and now an industry-first Level 4 qualification in client care. Within a few months of launching, over 400 of our reception staff enrolled on that course, demonstrated we have career pathways for everybody who works for us. And it also ensures that our clients receive the very best care from the best in the sector. Now developing employees of the future. Developing the employees of the future starts at the undergraduate level, and we utilize our network of practices across the U.K. to support Veterinary students to complete their work experience or their EMS at our practices. We're also deeply embedded within the universities themselves and we deliver clinical and professional training through lectures and final year rotations. Our newly launched EMS program is an industry first, and we deliver a progressive course students third, fourth and final years within university. And this also embeds that CVS culture within them that we will support them and develop their confidence and confidence throughout their clinical careers. Successful students are then guided onto our new graduate program, maintaining that positive pipeline of talent. And CVS sponsors undergraduate training at all U.K. vet schools to maximize our exposure and collaborative work with them to build industry-ready veterinarians from day 1. Our staff sit on university boards. We hold joint academic positions. And we also attend graduation to award prizes to students who demonstrate outstanding commitment to client care and patient care. Our industry-leading new graduate program is now in its tenth year. We maintained a small group teaching to build the graduates' confidence but also to help build those important social support groups. And this grows out of that EMS program to feed into the streams of professional Curricula we have available. This allows vets to further train certificate or specialize in a discipline of their interest. We're the very first to make available the entire online library for the British Small Animal Veterinary Association, and that was made available to all of our staff, and we continue to innovate. In fact, our innovation is so novel, we've presented our work at the Vet Schools Council's Academic Conference this summer. And our graduate program is in such high regard, I'm very proud to announce we maintained above-market share of veterinary graduates. The training program for our nurses is equally diverse ready from consultation skills to surgery and anesthesia, and nurses have a specific channel dedicated to them on Knowledge Hub. We have a dedicated advance nurse CPD coordinator, who once build those training programs, pushing our nurses forward throughout their career and constantly improving the retention. Nurse utilization means that we train our nurses to do as much as the legislation permits. They now run their own clinics for patients with chronic conditions like diabetes or geriatric patients or those who need a little help with our weight management. the knowledge base for managing these clinics doesn't exist in the undergraduate trading of our nurses. And therefore, this is all what we deliver in a post graduate world. Making use of our vet lab, training our nurses to further their practical skills through diagnostic imaging, dentistry and surgery has also shown to be a strong recruitment tool to CVS. It also has an important economic benefit in liberating our veterinarians, ensuring that all members of the clinical team are doing the right roles for their task. What is unique about CVS is we have our own externally accredited nursing school, also in its tenth year and it's ranked excellent and top 7 by the government's apprenticeship assessment. It's received other accreditations from Ofsted and the CVS and this rare status of excellence is evidenced by the majority of our learners receiving distinction. It offers a dedicated level 2 apprenticeship for our patient care assistance and advanced Level 5 qualifications for our veterinary nurses. And we're actively preparing courses for our nurses to take on new clinical responsibilities as soon as that legislation changes, putting us ahead of the curve for staff development and staff utilization. And it's in all the disciplines such as imaging and laboratory medicine specifically linked to that Patient Care Index. This summer the school moved to a new location, increasing its student capacity eightfold. And finally, our apprenticeship scheme is of a scale unseen in the sector. This year, our apprenticeship manager was appointed as a national apprenticeship ambassador by the government. We have over 20 different apprenticeship types in our clinical and support office teams, and we developed a unique collaboration with the University of Nottingham to deliver a trailblazing apprenticeship, which upon completion of veterinarians will become advanced practitioners. And we're so effective in utilizing our levy. We've invested 4.4 million to date and have over 1,000 apprentices starts in 2017. In fact, I'm proud to further announce that over 5% of our staff are concurrently in formal training programs, apprenticeships or in the graduate scheme. We're particularly proud of those who sequentially develop their careers through multiple apprenticeships, showing that CVS really does support that career development and that drive for lifelong learning. And apprenticeship schemes are part -- are particularly important for school leaders. We have expanded our engagement into the schools and to the T-level programs, which is synergistic with our community outreach programs, such as mini CVS, which raised awareness of the Veterinary professions and of animal care in the broader community, and it also helps to increase recruitment into those paraclinical roles. So for me, after 15 years in academia and clinical practice, I'm very proud to be part of CVS and its demonstrable commitment to staff development. And through our vet share group and through the online learning portal I'm even more proud to take this learning out to the wider profession, demonstrating and showcasing the quality of what we have to offer. Our extensive partnerships with universities and our deep engagement with the Veterinary students and that long-standing graduate program. I'm very confident in the future of our profession and our own excellent nursing score and that investment into the apprenticeship program demonstrates that we are committed to be a great place to work and constantly developing ourselves to give that very best possible care to animals. So thank you very much. I'd like to hand over to our Director of Innovation, Graham Dodds, who's going to talk about how we take our responsibility seriously through ESG.

So good afternoon, everyone. My name is Graham Dodds, and I'm Director of Innovation and Transformation here at CVS. I've been with the company around 8 years, and I'm a veterinary surgeon by background. And 1 of the responsibilities I have is to consider the future of veterinary sector, veterinary practice and what that might look like for our clients and for our colleagues alike. And 1 theme that keeps coming up is sustainability quite rightly as an important aspect of our future. So today, I'm going to spend a few minutes talking to you about our ESG focus at CVS. So I suppose 1 of the first things to point out is, although we've got a separate ESG strategy at CVS, we don't really consider it as a separate entity as it all folds nicely into our overarching business strategy. You've heard a lot today about our efforts to achieve our vision to be the veterinary company that people most want to work for and also to achieve our purpose of giving the best possible care to animals. And I think through my colleagues, you've heard some really exciting initiatives that we've got in flight right now to achieve that vision and that purpose, whether it's driving well-being, whether it's driving education and training, as Martin just described there, ultimately trying to push clinical standards forward and improve welfare for our patients and also the welfare of our clients. Everything we're doing at CVS is inherently ESG positive. So much so that we actually decided to come up with and coin the phrase care at our heart to describe all of our ESG efforts, and I'm pleased to say that this year, we published our first annual ESG report in that title. So what was our approach? This has been sustainability. And how did we build the strategy? Well, every good sustainability strategy must start with a materiality assessment. So what I mean by that is, how does our company impact the world around us and what we do. And we wanted to make sure we made that assessment relevant. So we looked at what the world is trying to achieve with sustainability, first and foremost. So we turned to the UN sustainable development goals, of which there are 17, you may be aware. So technically, all 17 apply to every company. It's just a measure of how much of them apply to yours. So we spent a good deal of time assessing them and understanding which ones apply to us the most, and they're highlighted here in color. The next thing was then to internalize our thought process and look at the 3 main pillars within sustainability, which are the environment, social and governance, ESG. There's lots of ways we can improve in every single column, but we wanted to make sure we tackle the low-hanging fruit and have the biggest impact possible. So looking at the environment, we as a company have decided to focus our efforts on our energy consumption and our associated carbon footprint with that. The next stream is waste because as you'd imagine, as a provider of clinical services, we generate quite a considerable amount of clinical and nonclinical waste in the work that we do. And then we have the Term 1 Health, which we used to describe lots of initiatives that are principally focused on animal health care that have a knock-on effect to human and health -- human and environmental health as well. A good example of that, if you're wondering would be our efforts on antibiotic resistance. So for the past couple of years, we've been trying to drive down the amount of antibiotics we prescribe because of the concern of antibiotic resistance out in the world for both our veterinary and our human patients. Moving to the social pillar. It's probably not a surprise to see some of the elements there, given what we've talked about today driving our vision. The well-being is really important to us. We want to create a happy, safe environment for our colleagues to work within. People development, as Martin has described, we want people to have a career at CVS to join and stay and feel enriched to learn more and drive standards in the right direction. And we are a company that want to be inclusive and acceptance of -- accepting out everybody. We've very much got an open door policy. So our EDI efforts are really important to us. And then finally, the communities within which we operate in, our clients and their environments within which they live. Now you'll notice looking at environment and social. I've numbered those work streams. And that's because as we were looking at this assessment, they seemed like great areas to engage across the people, across the business. And as such, we set up working groups to own and run each of these areas across CVS. These working groups are chaired by a member of our senior leadership group, or SLG, as I'll refer to it going forward because it's a bit of a mouthful. And we've got some great work going on in each of these areas. So the next thing to then consider was with each of these working groups, how are we going to get them to progress and get things happening and moving. So we -- it was important for us to come up with a template for success, and that's what you see on the screen here. We came up with what we call the cycle of improvement, and it starts at the top right with target setting. So each group has to set targets within their area to try and achieve over the coming weeks, months and years. We're trying to make sure those targets are smart. So specific, measurable, relevant. That's why we aligned them to the UN STGs. And we tried to make sure that we had short and long-term goals as well because it's important, of course, to consider sustainability in the next 10, 15 years. But there are changes we can make now. in the interim. So an example, if we look at our energy and carbon work stream, it would be great to have solar panels on every single roof tomorrow, but it's just not practically possible to do that. That doesn't stop us looking at how we procure energy in the meantime. And I'm pleased to say in the last year, we've done that. We've assessed for what energy we're purchasing and all of our electricity to 100% of our sites across all of our territories comes from renewable sources now. The next thing after target setting is to take action, of course. And as I've mentioned already, the working groups are chaired by SLG members. It's endorsed by the Board, and that gives them the remix to push the actions through and engage the business. And then after taking action, of course, we need to make sure that we measure the impact of those actions, and we try and do that in a quantitative way where possible. And if there is a standardized report out there, and sticking with energy and carbon, we'll look at SECR, we will do that as well. So SECR is our Streamlined Energy and Carbon Report. We've got to produce that annually. So we don't reinvent the wheel. We just use that as long as other measures to check progress with our energy and carbon work stream. The next point with measurements is that another key step we've taken this year is to link some of this improvement to executive remuneration. This is the first year we've done this, and I think you agree it demonstrates how seriously we take this responsibility. Finally, of course, is then reporting. I've mentioned already that we've published an annual ESG report for the first time. I'll come back to that shortly. But beyond that, we also provide regular Board updates as a monthly report to the Board, and we also report to other stakeholders, both internally and externally throughout the year. So I thought I'd give you a bit of an example of some of the stuff that's going on in some of these work groups. So we'll turn our attention to the waste stream, as I mentioned at the start. So our waste working group is chaired by SLG member, Rosie Naylor, who's not here today, but she's a veterinary surgeon. She's been with the company a while, and she's done fantastic work with a lot of people across the group. That group, working group contains nurses in our practices. It contains people from our head office. There's a real amount of engagement. And thinking back to that cycle of improvement that I mentioned and I'm talking about the targets, 1 of several targets they've set themselves is to generate -- is to reduce clinical waste going for incineration by 5% over the next year. So when we were looking at how we would do that, we know that our clinical waste gross tonnage is contaminated with nonclinical waste. So in the real world, in a general practice, you would have a clinical waste bin, a general waste bin. Sometimes it's easy to put some things in the clinical waste because it's just there. So our efforts actually are looking at the holistic waste management, both clinical and nonclinical, and they decided to take a reduce reuse, recycle approach to manage this. So one of the -- so looking at the top, by waste reduction, what I mean is not bringing materials into the business that will ultimately become waste anyway. And 1 of our most successful initiatives in this camp is a partnership actually with 1 of our main wholesalers, NVS. Now our wholesaler delivered products, drugs, medicines, dog food, et cetera, to our practices on a regular basis. And we do so in these blue plastic boxes. I'm sure you've seen them before. Now over the last couple of years, we've worked with them to use that infrastructure and capture excess packaging from stocking the shelves and putting things in the practice to send that material back to the wholesaler on their next collection and delivery. Now as a result of this, sending all that material back, they have been able to either reuse or recycle 90% plus of the material that we sent back, which would have otherwise ended up in our waste streams. There's been a real positive turnaround with the amount of material produced there. Looking at reusability, that's the next opportunity, if you can stop it from coming into the business, let's try and reuse what we can. And we're the first veterinary company to be trialing a new bit of technology that will recycle Sharp spins. So again, let's go back to that consult room, waste goes in bins, but our sharps or needles and things go in sharp spins. You've probably seen them before. The traditional method for getting rid of those bins is to incinerate the whole thing with everything inside it. So as you can imagine, over lots of veterinary practices that adds up to considerable gross tonnage. So there's a trial on -- I'll go in a minute within our business where we take those bins, send them to a partner who empty them safely, sterilize them, wash them out and send them back. And if that turns out to be a successful trial, we'll consider rolling it out across the business to try and achieve that target that we mentioned at the start. And then finally, recycling, what can't be reused, what can be reduced, you can always try to recycle. And over the last 2 years, we've put several different recycling initiatives across our business. So every single site now has the ability to have DMR recycling, which is dry matter recycling your papers, you cans, et cetera, et cetera. But if you take a moment today to look at the back of the hall, you'll see some interesting bits of kit up there, and you'll see ophthalmoscopes and nasal scopes and all these used batteries. So we use a lot of batteries across the estate. And we've also put out a battery recycling seat to recycle batteries and minimize the harmful impact of throwing them out in the environment. So just 1 last slide, really. I've mentioned it several times throughout the presentation. We have produced our first annual ESG report this year, which contains lots of additional information and lots more of the initiatives that we're working on within an ESG -- under an ESG lens across CVS. And it's also worth noting that when it comes to reporting, we've aligned ourselves to the SASB Sustainable Accounting Boards -- Sustainable Accounting Standards Board. I knew I would trip over saying that this year. And they have multiple frameworks for reporting and sustainability. They have medical, they have retail, but don't have veterinary. So we've hybridized them, and you'll see how we've done that in that report. I'll also just take a moment to highlight another report that you can find on our website alongside that, which is our quality improvement report. We were the first veterinary company ever to produce this. And linking back to the very start of my presentation when I mentioned antibiotic resistance and our efforts to reduce that, you can find a lot more information about that in there along with a lot of other environmental, social and governance initiatives that we've got under sustainability now. per briefly mentioned that executive remuneration this year is going to be linked to our ESG efforts. And on the screen, you'll see some of the targets that will need to be met in order for some of that remuneration to be paid. I mentioned already about the 5% reduction in gross tonnage of clinical waste going to incineration, but there are others that align themselves with the E, the S and the G in our strategy. I'd just like to finish by saying thank you very much for your attention to the presentation today. Obviously, COP 27 is taking place in Egypt right now. So it's a timely reminder that we really must take care of the planet within which we operate. And I'm proud to say that I think CVS really ahead of the curve here and doing a great job, and I'm very proud to be a part of it. So thank you for your attention, and I'll hand back to our Chief Executive, Richard Fairman.

Thanks, Graham. So I will now finish with some key takeaways from our presentation. So on the next slide, we have a very clear strategy for growth, and we are well positioned to invest in that growth. Today, we've outlined 6 key elements of our ambition over the next 5 years: organic revenue growth of between 4% and 8% per annum, adjusted EBITDA margins between 19% and 23%, investment in facilities, clinical equipment, technology and also greenfield sites to drive additional organic growth and also to support with that margin enhancement, acquisitions subject to discipline and subject to a minimum 10% internal rate of return, operating cash conversion of 70% and above and leverage remaining below 2x. And through a focus on these 6 areas, our ambition is to double adjusted EBITDA over the next 5 years. We'll start with Charles.

Can you give a bit more color on the rollout of the practice management systems in terms of how much it will cost, what the risks are of implementing it, how comfortable people will be with using it and sort of the scale of opportunities you are in terms of what the opportunities are from it in terms of things like the food sales? What's the scale of opportunity there?

Yes. So we have a common practice management system that we currently use across our small animal practices in the U.K. And the current system is an on-premise system is called RoboVet and is supplied by Covetrus. Now that system isn't as flexible as a modern system. It's clearly on-premise and not cloud-based, and it limits some of our opportunity to develop and expand our services that we provide to clients. So we have signaled that we've chosen the Provet Cloud system. And Ben and the operations team have selected our system from all of the available systems on the market. And we believe as a company that that's the best system for our development going forward. We will cautiously roll this out, though, and we will try the system in 1 practice to begin with. That trial will help us configure the system because it's quite flexible. And then once we've got confidence it's working, we will then roll it out to another 15 practices and then across our entire group in due course. Now the benefits of that system are that it allows us to provide better support to our vets and nurses, allows them to work remotely. And as they move through some of our large practices, that can be quite helpful. It should allow us to interact with clients in a slightly more advanced way. So for instance, at the moment, we can't offer online booking, and that's something we will be able to offer through this new system. It gives us a more disciplined approach to billing in that it captures all of the procedures that are performed in a practice and then make sure we bill appropriately. And clearly, it's not on-premise. It's cloud-based, and that means we will reduce the support costs. So we will be replacing 1 license fee with another, and that new license fee might be slightly more expensive. But by reducing the on-premise cost and the cost of supporting those servers, that should all be kind of fairly neutral. There is a capital investment as we roll out this system, but that capital investment is not significant. And as we talked through all of the investment opportunities, it's probably the smallest of all of our investment opportunities. Thanks, Charles. Andrew?

It's Andrew from Investec. Just a quick one. I think you mentioned it in the earlier presentation, Richard, and I think Lizzie talked to it when she was talking to the Patient Care Index. And one of the things you're talking about is aging population of dogs or of animals. And I wonder -- I just wonder -- are you seeing a mix shift in the type of procedures that you're doing, based on whether it be animal aging or even the animals that were taken out through the pandemic? Are you seeing a mix shift in what's required of you? And have you got the right infrastructure to serve it in the future if that continues?

Yes. So there'll be different elements to the response. So we'll start with First Opinion Care. And maybe Lizzie, you can comment on any changes we're seeing in terms of our first opinion provision, and then maybe Helen talk about advanced care?

So I think from a First Opinion point of view, we already offer a very broad range of services, and we're seeing with our clients an ever-increasing commitment to actually undertaking work that we are suggesting. So we focus very much on this recommendation culture that we offer to all of our clients and patients. And we are seeing that there is significant -- an ongoing increase in uptake from those patients. In terms of our ability to be able to offer those services, the investment, the ongoing investment in our services and our technologies, as you can see from the equipment in the back of the room is available in most of our First Opinion sites. We are very capable of offering that full service to our clients even in the First Opinion setting.

I think the increased humanization of our pets and the fact that they are seen very much as family members and also just the wider knowledge of our advances within the veterinary industry as a whole means that the general public has far more opportunity to understand what best patient and quality care is. And I think we see that in our consult rooms. And that allows us to really expand our advanced offering, which we continue to do. And I think we've never gone for a low-cost high-volume model. So we've always gone for that quality patient care. So we've selected over a number of years, those clients that really are invested in wanting the best treatment for their pet, and that puts us in a really strong position going forward. the integrated model that we have with First Opinion, the ACSN network and obviously, our specialist referral division really means that we've got the scope and integration to be able to offer a unique service.

Question behind [indiscernible].

Rob Chandler from Berenberg. I guess a follow-up question related to that, actually. How are you seeing customers adapting to the broader range of technology and facilities available on the ground? I mean does that vary geographically across the U.K.? Does it vary depending on the insurance provision that they've taken out? And how is behavior changing not in terms of current trading, but in terms of the actual behavior of the customers?

Ben, do you want to comment on that?

Probably has maybe to talk about some of the stuff that's coming on. I suppose the obvious change that we went through over the last 3 years was the necessitated introduction of Teleconsultation. And interestingly for us, following that initial part of the COVID pandemic, where all of our clients had to undertake Teleconsultation because they have no choice. The Royal College wouldn't allow routine and nonemergency resets to come to our clinics. We very rapidly saw that fall away because I think there's a lot of narrative that you can read that veterinary profession is virtualizing and people are going to have these consultations remotely. And actually, our experience is very much the opposite. -- people want to come into the clinics and have their patients looked at. But probably worth me having to Graham to talk about some of those other advancements that particularly Provet Cloud will unlock and the ways in which our clients might be able to interact with us through that.

Yes. Thanks, Ben. So as Ben mentioned, I think the Telemedicine side of things isn't necessarily going to be that massive change that you might be led to believe. But I think the periphery of the veterinary consult, so how do I get my pets seen? Do I book an appointment online or do I pick up the phone? How can I get access to my pet's health information? So at the minute, we still have a booster vaccination cards as a physical record of vaccination history. With Provet Cloud, that will enable us to create a sort of dashboard, if you like, of pet health care in the clients' hands that shows that kind of thing. So they'll have access to far more information. I think the demand is starting to show that clients don't want to pick up the phone so much anymore. They're looking for the ability to book online in line with other sectors. I'm pleased to say I think we're bringing this technology in, we'll enable that.

We've got some questions from people dialing in. So should we have our first question?

Thank you, Richard. First question is from Pablo Cipriani from CP Capital. Can you explain again your plans and ambitions on greenfield developments?

Yes. So we see greenfield as a really great opportunity to augment our organic growth. We have opened a number of new sites. So when we talk about greenfield, we're talking about brand new Veterinary practices. We've opened 7 in the past, some of which were -- or 1 of which was -- 2 of which were referral hospitals, the majority were First Opinion. But those First Opinion ones varied from very small branch practices to full-service clinical practice with night servicing included as well. We see the opportunity to roll out full service veterinary care clinics, not necessarily just referral. We're really focused on First Opinion there. In small numbers, each year over the next few years, there are no limitations to where we can put those practices. We can clearly choose unlike acquisitions where we're waiting for opportunities to come to us. We can absolutely identify where might be the best area. And some of those decisions are based around where do we get the best synergies. So we'll always get the procurement synergy we'll always get the laboratory and crematory synergy because they're national providers. But perhaps it's the referral synergy that we want to make sure that, that new practice can feed in to our referral hospitals. We absolutely want to make sure it can feed into 1 of our night hospitals. There is a very, very long list of where we could do that. But clearly, we want to do that in a measured way. We're doing 3 in the next 12 months. We could increase that number a bit. Clearly, if we did a very large volume all at once, we would suffer the negative EBITDA of all of those practices in their first year all at once. But as we shared today, those practices in year 2, we expect to be profitable and actually reach that breakeven point around that year point. So we long road major ambitions, but probably in a more measured way so we can get into a cadence of opening a smallish number of greenfield practices every year.

Just a follow-up question from Pablo. Can you please elaborate again the reasons of the increase of capital expenditure?

Robin, do you want to pick up? .

Yes. So we have a distribution of performance across our practices. And I think as we outlined earlier, some of that will be unlocked through our focus, some of the key focus areas around people and providing great clinical care. But what we have seen in the recent past is where we invest in a practice, we see an immediate uplift in performance because it enables us to provide better clinical care, enables us to attract and retain talent. And as we continue to see those improvements in performance, it gives us additional confidence to deploy more capital. And if I think about our practice portfolio, we've historically grown inorganically. So we've been historically buy and build. We have, at one end, nice shiny hospitals that are really conducive to providing that great clinical care. And at the other end, we have former Terrace houses, which are not so good. So we see an opportunity in over 200 of our sites to invest in CapEx expenditure and we will deliver good returns from that investment.

One further question at the moment. We got a few questions, but 1 more. How does investment in property improve employee NPS? And what can we expect this to move to in the future?

So maybe Martin can ask this because Martin spoke a lot about our people development and our investment in property and facilities is key to our ability to attract and retain talent.

Yes. Thank you, Richard. I think a lot of our practices do have training spaces within them. And as we develop our property, we're able to build that sort of educational space into those practice buildings. And that's also a team building space. So the team to be able to come together and have meetings there and increases that cohesiveness. We're also able to bring together the new graduates into that space as well. So I think there's a lot of work we can do for property in a very physical sense that can help increase the eNPS, but also just working in a nice environment with better kit, with better equipment around you and a practice building that flows according to your workflow is also a better place to work and increase the E&PS.

I'll pass back to you just know for any further questions. I think [indiscernible].

Thank you -- just on Vet Oracle, is that it sounds if it's more sort of a tool to help your vet at the moment. But is there a sort of bigger opportunity set here where, I don't know, you can sort of work with other vet practices sort of third party effectively? And where -- are these radiologists employed by you? Or how does the model actually work?

Yes. So Helen?

Great question. Teleneuro imaging service at the moment and our radiologists, it offers itself out to all practices across the globe at the moment, and that's really continuing to expand. And those radiologists are ours, and we continue to invest in expanding those numbers. Our Vet Oracle, Telemedicine, oncology, dermatology offerings and the other ologies that come along with that are in-house at the moment, but there, as you say, are vast opportunities to look at other options in the future.

Thank you. One thing that I found 2, 3 years ago was that Veterinary practices namely was just not taking on clients. So my question is, are you often turning away patients because you're at capacity? And how do you measure capacity a bit at number of animals per that practice?

So we haven't turned away clients. But Ben, maybe you want to comment on this?

Yes. I suppose during the pandemic, we had periods of time where we were fairly long wait times to join and the puppy boom meant that we were managing resource. Part of the property relocation and refurbishment plan is to make sure we have physical capacity to take on new clients where there are practices constrained. In the past, the constraints far often been the number of clinicians we've been able to attract. Now those 2 things are intimately linked because the minute you move into a nice facility, you can employ more people because more people want to work there. And in fact, the second site we'll visit today in Chesterfield in the Dobbies side is a really good example of that site moved in August if you asked that thing about their ability to recruit since then, it's really different. So historically, the number of vets and nurses has been the limiting factor. I'd say that's far less of a problem now because of our improved performance in terms of recruiting and retaining them. And sometimes the physical facility is a limiting factor often the number of consulting rooms, particularly because we as a group are focused on making sure our nurses are also consulting because we know our clients particularly rate that experience and we want to make the most of using our nurses. So we are almost always in a relocation adding consulting space and sometimes adding clinical space as well. We never share the specific metric, and I'm not sure it's necessarily as clear cut as you might think in terms of this many patients because the mix of skills in each factors differ. So if you have a practice with a large group of really experienced nurses, actually the number of pets per vet can be much higher because your nurses there are able to consult, they might be doing minor surgical procedures. Whereas if you have a very limited number of nurses and perhaps more patient care assistance, which might be the case in 1 of our clinics where you're a bit less able to recruit, your number of pets per vet would be lower. But we never shared that specific number.

Okay. I think we've got time for maybe 1 more question, and maybe we go to the live stream.

Yes, we've got a question from Ivan Tempus from Jefferies. Can you talk about volume and prices in your revenue guidance? Volume in that if new pets go to the vet more in the initial years, how does this impact your growth near term as the market normalizes before the number of chronic diseases develop, which require more visits and price in that, do you assume that you can continue to increase prices at historical rates as part of your 5-year plan? And would this impact demand?

Maybe I will split the response. Maybe Ben, you talk about the volume piece and the increased population and maybe Robin, the price.

Yes. I think the increase in population is 1 of the things that's maybe not as well understood as it might be because we certainly saw a spike in the number of patients that we're looking after as a result of the puppy boom or whatever you want to call that increase in pet numbers during the pandemic. But what we do know is, yes, they do visit the clinic a bit more often than that year 1, but they are coming to you for the lowest value, lowest margin procedures that they have at any point during their life. So they're coming to you for vaccinations. They're coming to you for their neuterings. Those are about the only part of the entire experience that a pet has with us that is really sharply priced because that's about the 1 thing that people compare. And in fact, in reality, we often challenge ourselves because people don't choose us because of the price of our neuterings but nonetheless, those are the most keenly priced, and therefore, the lowest margin, lowest revenue. So actually, we see revenue when you look at a lifespan or, for example, a dog from years 1 to, say, for example, 12 to 15, growing linearly. We don't see what's historically been considered to be normal, which is the sort of smile that will be different if you're selling lots of retail products. So if you're selling loads of dog beds, leads, collars, that sort of stuff, people do buy a whole bunch of that in year 1 for their popper kitten and very quickly stop buying that stuff as you realize you don't need 8 dog beds and cages, et cetera. So if you have a very significant retail component to your operation, which we obviously don't, then you definitely see that fall off over those first years. But our experience is that our growth in spend per pet is linear over time.

And from a pricing perspective, I suppose, historically, we've put through low single-digit pricing. We believe we can continue to do so. I think the opportunity for us is less around price, it's more around Patient Care Index and making sure that we recommend in the consult room. And by providing a diagnosis in the consult room and providing the best care that animal can get that invariably results in a high ticket value from that visit.

Thank you. So thank you for your questions, and thank you all for attending today. We really appreciate your continued support. And a big thank you to all of our presenters today. Now you're used to hearing from Ben, Robin and myself. So a special thank you to Lizzie, Helen, Martin and Graham for their presentations and also for bringing our business to life through their discussions. I hope you can stay for lunch, and hopefully you can stay for the practice tours this afternoon. But thank you, and I appreciate your support.