Welcome to this presentation of our interim results for the first half of our financial year to June 2023. I'm Richard Fairman, Chief Executive, and I'm joined by Robin Alfonso, Chief Financial Officer, and Ben Jacklin, Chief Operating Officer. This analyst call is being recorded. The recording will be uploaded to our website later today. The agenda for our presentation is set out on slide two. I will open with an overview of our interim results. I will give an overall update on our business. Robin will provide a more detailed financial review, with Ben then giving a strategic and operational update. I will close with some concluding comments. Following our presentation, we will invite questions from analysts. In our Capital Markets Day last November, we outlined six key components underpinning our ambition to double adjusted EBITDA over the next five years.
On slide four, we have set out the progress we've made in the first half. As a reminder, these six components are organic revenue growth of between 4% and 8% per annum. adjusted EBITDA margins across the group between 19% and 23%, subject to mix. Investment in practice facilities, clinical equipment, and technology to drive further organic growth and to support margin enhancement. Acquisitions subject to our disciplined approach and a minimum 10% internal rate of return. Operating cash conversion of 70% or above, and leverage remaining below two times. I'm pleased to report that we've made good progress in the first half with like-for-like sales growth of 7.5%, adjusted EBITDA margin of 19.5%.
We have invested GBP 19.9 million in capital expenditure, of which GBP 14.9 million is investment CapEx, with the remainder to maintain our existing facilities and technology. We completed five acquisitions in the first half for initial consideration of GBP 24.4 million and a further three acquisitions so far in the second half. Operating cash conversion was 58.9%. With our full year expectation remaining at circa 70% and leverage of 0.6 x. Turning to slide five, we continue to operate in a resilient market, this is reflected in our interim results. There is a continued humanization of pets, notwithstanding pressures from the current macroeconomic environment, owners continue to seek great quality care for their animals. In the global financial crisis, when household finances were squeezed, we saw spend across the sector being resilient.
The one area of spend which did reduce was that on preventative healthcare. Hence, we're pleased to see continued growth in our preventative healthcare scheme, The Healthy Pet Club. We have seen a further 2.3% increase in membership in the six months, with 481,000 members as at December 2022. We are also reassured to see that across the wider industry, the number of dogs receiving regular booster vaccinations and the number of cats being microchipped remains reassuringly high, and that is according to the PDSA's 2022 Animal Welfare Report. We have seen an increase in the pet population in the past three years, as we have said previously, we expect to see an increasing benefit of this in the next five to 10 years as these new pets age and naturally acquire greater clinical care.
The same PDSA Animal Welfare Report said that new pet owners are likely to have a gross household income in excess of GBP 50,000, and we expect them to continue to seek great veterinary care for their pets. We also track clients who buy drugs in our practices versus those who pay for a prescription and then buy their drugs online. The proportion opting to take a prescription remains flat and also extremely low. Moving to slide six. An important element of our five-year plan, as outlined at our Capital Markets Day, is our focus on making further targeted acquisitions. I'm delighted to report that we completed five acquisitions in the first half for combined consideration of GBP 24.4 million. We have completed a further three acquisitions in the second half to date, for combined consideration of GBP 10.9 million.
As you can see from the detail provided, we continue to focus on high-quality, first-opinion, small animal practices. In the case of the Seadown practice, we proactively engaged with the CMA ahead of completion in order to ensure there were no local competition concerns, given that we had some existing presence in this area. Turning to slide seven, we have a clear strategy which remains unchanged. Our purpose is to provide the best possible care to animals, and our vision is to be the veterinary company people most want to work for, underpinned by four strategic pillars. We continue to focus on delivering organic growth through the provision of high-quality care across our integrated business and through the recruitment and retention of highly skilled clinicians.
With our strengthened balance sheet, we are well placed to support this organic growth through increased investment in improving our practice facilities, in new clinical recruitment, and in improved technology. We also plan to augment this organic growth through investment in selective acquisitions and in new greenfield sites, and Ben will expand on this later. I will now hand over to Robin, who will provide a more detailed financial review. Robin
Thank you, Richard. CVS delivered robust financial performance in H1 2023, delivering continued revenue and EBITDA growth, increasing investment in our existing Veterinary Practices division portfolio in support of our strategic priority to provide the best clinical care for animals and increasing our acquisition investment. On slide nine, I'm pleased to show another set of strong half year results. Revenue grew 8.2% to GBP 296.3 million, from GBP 273.7 million, with like-for-like sales growth of 7.5%. Our like-for-like sales growth is adjusted for working days. It excludes current year acquisitions and it only includes prior year acquisitions from the same month this year as they were acquired in the previous year. adjusted EBITDA grew 11% to GBP 57.8 million from GBP 52 million, benefiting from top line revenue growth.
Free cash flow also grew 21% to GBP 23.5 million from GBP 19.4 million, benefiting from the increase in adjusted EBITDA and operating cash conversion of 58.9%, which was also up year-over-year. Full year operating cash conversion is expected to be in line with our capital markets ambition of 70%. Good operating cash generation has meant that we're able to increase CapEx and acquisition investments whilst maintaining low leverage at 0.6x, which was marginally up from 0.4x at the 13th of June 2022. adjusted EPS of 45.6p, up 9.9% from 41.5p benefits from adjusted EBITDA growth.
Capital expenditure increased to GBP 19.9 million in the first half from GBP 10.6 million to support ongoing expansion opportunities, including a number of refurbishments and relocations and one new greenfield site. We expect development capital expenditure over the next few years to be in the region of between GBP 30 million-GBP 50 million per annum. Acquisition activity has also stepped up, with five acquisitions made in the first half for consideration of GBP 24.4 million. A further three have been made in the second half year to date. The pipeline for acquisitions remains strong. We continue to see an opportunity for further investments in the future, both in the U.K. and other territories. Turning to slide 10.
Revenue was up to GBP 296.3 million from GBP 273.7 million, with good performance across our divisions and like-for-like sales growth of 7.5%. The Veterinary Practices division, which comprises our companion animal, referrals, farm animal, equine, Veterinary Practices, as well as our buying groups, Vet Direct and MiVetClub. This division has performed well with 8.2% revenue growth continuing to benefit from the focus on delivering quality clinical care and benefiting from a resilient market. Despite seeing a 5% increase in the average number of vets we employ, we continue to want to employ more. We've also seen a 4.3% increase in The Healthy Pet Club membership since December 2021 to 481,000 members.
The Laboratories division provides analyzers in practices which supports testing in-house, for which we supply the reagents for the tests and diagnostic testing services. Revenue in this division increased 7.2%, benefiting from an increased volume of tests performed and an increased volume of analyzers in practice. The Crematoria division, which provides both individual and communal cremation services, as well as clinical waste disposal, continues to benefit from an increase in the number of customers choosing an individual cremation and a more bespoke service despite lower cost options being available. This follows the rollout of our direct pet cremation project, improving processes to allow customers more time to consider their pet aftercare options. Our online retail business has benefited from an increase in transaction values, in particular from pet food sales online. On to slide 11.
The 8.2% revenue growth, coupled with a 0.5 percentage point improvement in EBITDA margin, resulted in a double-digit growth in EBITDA to GBP 57.8 million from GBP 52 million. This was despite having 1 less working day due to the unplanned additional bank holiday in the half and despite inflationary headwinds, in particular from increasing utility costs. Gross margin before clinical staff costs improved marginally from 77.1% to 77.5%, and about a third of our cost of sales is made up of purchases of our own brand products, which gives us some protection from increasing prices with longer term contracts in place. Employment costs as a percentage of revenue increased to 51.9%, reflecting an increase in the number of frontline colleagues we employ and continued investment in our support functions such as HR, IT, and property.
Our Veterinary Practices and Laboratories division have seen high -single -digit adjusted EBITDA growth, whilst our Crematoria division has experienced some impact of rising kerosene costs, resulting in a 6.3% decrease in adjusted EBITDA. Our online retail business adjusted EBITDA has been impacted by a step up in digital marketing in the half. Turning to slide 12, the group continues to generate healthy cash flows and de-levers quickly post-investments. Free cash flow of GBP 23.5 million benefited from increased adjusted EBITDA and an increase in operating cash conversion. Operating cash conversion of 58.9% is impacted by colleague bonus payments and an increase in stock. Full year expectation is cash conversion of 70% in line with the statement made at the Capital Markets Day.
The step-up in investment CapEx and acquisitions investment resulted in net cash outflow of GBP 21.6 million in the half, and a slight increase in leverage to 0.6x . On slide 13, to support our ambition to double EBITDA over the next five years and to support the investments we want to make, we've completed a refinance of the group's debt facility. Available funds have been increased from GBP 170 million to GBP 350 million. Covenants have remained unchanged, with maximum leverage of 3.25 x and interest cover of no less than 4.5 x. The term has been extended to February 2027, with an additional one-year extension available. Margins have also remained unchanged from our previous facility.
Although our intention is not to utilize the increased facility immediately, we are pleased to have the funds available to support our ambition over the next five years. Moving to slide 14, we have a strong balance sheet with GBP 350 million of debt facility and low leverage at 0.6 times. We anticipate growing free cash flow from continued EBITDA growth and operating cash conversion at 70%. We will continue to take a disciplined approach to investment and plan to invest investment CapEx between GBP 30 million-GBP 50 million per annum and over GBP 50 million per annum on acquisitions over the next five years. Depending on timing, we would expect most, if not all, investment to be funded through available funds, maintaining leverage below two times. I will now hand over to Ben for a strategic and operational update.
Thank you, Robin. On slide 16, we share further good news on our progress towards our vision of being the veterinary company people most want to work for. As a people business, the metrics shared here are amongst our most important, and I'm pleased to say our colleague engagement has hit record levels with Employee Net Promoter Score reaching a level of +18.6. This significant jump in our colleague engagement in such a short space of time may plateau, but the continued improvement is great news for our business. Unsurprisingly, given such significant progress on colleague engagement, our colleague attrition continues to fall and is now at its lowest level since we started recording the measure. As a result of this and continued successful recruitment in a challenging market for clinicians, the number of vets and nurses we employ has once again risen year-over-year.
Vets by 5% and nurses by 10.5%. Alongside our ongoing efforts to build an industry-leading culture of putting our people first, we've also introduced a number of new benefits for our colleagues. These include a new health cash plan where colleagues can opt in to receive their cashback on routine medical appointments such as dentistry, physiotherapy and optometry, to name a few. We've also expanded our policies for health-related events providing additional time off and support for fertility treatment, gender transition surgery, pregnancy loss, and many more, further supporting our colleagues during significant life events. Over the page on slide 17, we are continuing to deliver on our commitment to investing in our existing facilities as well as greenfield opportunities.
We opened our first greenfield practice of this financial year, Southport Vets, in December, and we are on track to open a further two in the second half of the year. These greenfield sites are built to the exacting standards of our new CVS practice design, covering around 3,000 sq ft with great parking and a welcoming environment for clients, their pets, and our colleagues alike. Over the page, we've been able to step up our acquisitive activity and have recruited a group of really high quality acquisitions in the first half, which complement our existing network of Veterinary Practices, enhancing the breadth of facilities, skills, and expertise in the group. As previously discussed, the CMA review provided a helpful roadmap to U.K. acquisitions, and our proactive approach to communicating with the CMA provides us with reassurance on local competition issues.
We're focusing on acquiring high quality practices conducive to offering great clinical care, with one example being Werrington Vets, a small animal practice we acquired in July 2022. A fast-growing practice in an excellent facility, the owners chose to sell to CVS to provide central supports to the team while supporting their ongoing growth. This is very much our ethos. We want practices to join us and thrive and feel empowered to take local decisions to grow and succeed. Meanwhile, our support functions such as HR, finance, and health and safety can alleviate some of the burden on practice leaders who can then focus on their clients and their patients. We'd now like to share a short video from Werrington Vets to bring this to life.
My name is Nikos Pallas, and I'm the Clinical Director here at Werrington Vets. Before we opened with my business partner, we had a very clear vision of where we wanted to go, and there was a point that we got there. You get too much pressure by many things that they happen day to day in a practice. Having a group that supports you takes much of the pressure off. The reason why we chose CVS is that they made it very clear from the beginning that they really wanted to buy this practice and support it, and make it a better place. I've been part of a sale before, as an employee, not as an owner, and I know it can have a lot of stress and a lot of change, but I have to say, it wasn't the same with CVS.
It was extremely smooth. It was what they promised us.
I'm Rachael Geraghty. I'm the practice manager here at Werrington Vets. Since the acquisition, it's been brilliant. We've got the same amazing team here. We do things very much the same way day in, day out as we did before. The freedom is important to us because it's what makes us different. It's what makes us stand out to clients, that we're very personable and also that colleagues feel that they're part of something different, they're part of something unique. The benefits of being part of the CVS Group is the umbrella of support that we get. The support function is fantastic. We've got HR, finance, treasury. Anyone that I need to contact for a question, they're there. One of the great things about the group support that we get is recruitment. We all know how difficult it is to recruit within the industry.
We couldn't find a vet for months. We were part of CVS for a short period. The recruitment team found us a vet. Since we joined CVS, we've taken part in an employee satisfaction scoring. They refer to it as eNPS, Employee Net Promoter Score. I'm pleased to say that in the last month, the team here, our colleagues, scored us 100%. To other practices being acquired by CVS, I would say take it as an opportunity for the whole team. There's so many learning and development opportunities and definitely opportunities for progression for people that want it.
Turning to slide 20, whilst the runway for acquisitions in the U.K. main remains strong, we're also carefully considering targeted entry into new geographical markets, both in Europe and further afield. We are particularly attracted to territories where there are similar clinical cultures to the U.K. and veterinary market structures which currently have less corporate consolidation. Our decisions are being shaped by extensive analysis of these markets, some headlines of which are shown here, but also by the identification of suitable target acquisitions. These acquisitions must be available at appropriate valuations and be of sufficient quality and size to help us achieve scale and market penetration as a high-quality provider of veterinary care in the new market. Our purpose is to give the best possible care to animals. Our vision is to be the veterinary company people most want to work for.
On slide 21, we've set out examples of initiatives in FY 2023 so far, which have both benefited our colleagues and the veterinary profession as a whole. We've developed a comprehensive training program called Accelerate, designed to help any CVS vet develop their confidence and competence to respond to emergency and critical care cases. We once again made a donation to Vetlife, a charity providing emotional, financial, and mental health support to the veterinary community. As I noted earlier, we've enhanced the benefit package available to our colleagues, including increased sick pay for exceptional health events. Lastly, in February, we launched our new CVS Inspire clinical magazine, which showcases some of the wonderful work happening within small animal and referral divisions and provides our colleagues with monthly CPD. I'll now hand back to Richard for some final comments.
Thanks, Ben. I will conclude on slide 23. We remain well-positioned for future growth. We operate in a favorable market with clients seeking high-quality veterinary care. Key to the delivery of this care is both our integrated veterinary services model, through which we can provide joined-up care, but most importantly, our outstanding team of colleagues. We continue to generate cash, and with our strengthened balance sheet, we are well-placed to make investment in support of further growth. We outlined six key elements underpinning our five-year plan at our recent Capital Markets Day, and we have made a solid start in the first half with like-for-like revenue growth of 7.5%. Adjusted EBITDA has increased by 11.2% to GBP 57.8 million, with adjusted EBITDA margin increasing to 19.5%.
We have increased our investment in facilities, equipment, and technology with GBP 19.5 million of capital expenditure in the first half. We have completed eight acquisitions year to date for combined consideration of GBP 35.3 million, and we have opened a new greenfield practice in Southport. We continue to invest in support of our colleagues and this is contributing to an improvement in colleague engagement. We have successfully refinanced and extended our bank facilities with margins unchanged, and this has secured our funding requirements for our five-year plan. Trading across the seven months year to date remains in line with full year expectations. In summary, we've delivered another strong set of results in the first half, and I'm delighted that this momentum has continued into the second half with trading year to date in line with market expectations.
As we set out at the Capital Markets Day, we have a clear five-year plan, and having successfully refinanced and extended our bank facilities, we now have funding in place to deliver this five-year plan. Key to our continued success are our people and hence I'd like to close by taking the opportunity to thank all CVS colleagues for their continued support and dedication in providing the best possible care to our clients and their animals. That's it. Thank you for attending and thanks for your continued support.