Welcome to this presentation of CVS Group's full year financial results for the year ended 30th of June 2025. I am Richard Fairman, CEO, and later we also hear from Robin Alfonso, our Chief Financial Officer, and Paul Higgs, our Chief Veterinary Officer. I'm delighted to report on another successful year of growth across our group, with improved U.K. operations and continued expansion of our platform in Australia. We have successfully navigated some significant challenges over the past 12 months, and the strong market fundamentals remain attractive. We enter the new financial year with a strengthened company, which is well positioned for further success. Revenue increased by 5.4% to GBP 673.2 million, following a start to year that was impacted by softer market conditions in the U.K., with like-for-like sales growth of -1.1% for the first six months.
It was pleasing to see a significant improvement in the final quarter, leading to positive full year like-for-like growth and improved trading, which continued into the first two months of the new financial year. Adjusted EBITDA increased by 9.4% to GBP 134.6 million from both acquisitions and disciplined cost management, and Adjusted EBITDA margin increased by 70 basis points to 20%. The sale of our Crematorium Business in May 2025 was at an attractive 10x EBITDA multiple, and the capital generated from the divestment provides additional firepower for continued selective organic investment in the UK and expansion in Australia at multiples that are value accretive to the group. The crematory business has been treated as a discontinued operation and has therefore been excluded from the revenue and EBITDA numbers shared today, including the comparatives for the previous financial year, which are now shown for continuing operations only.
We delivered improved adjusted operating cash conversion, which at 76.9% for the year is ahead of our stated target of circa 70%. In light of the strengthened operating cash flows and the proceeds received from the sale of our Crematorium Business , net bank borrowing decreased to GBP 131.4 million at 30th of June 2025, and leverage reduced to 1.18 x. We completed a further seven Australia veterinary practice acquisitions in the financial year, comprising 15 practice sites, and a further two acquisitions since the year end, comprising eight practice sites, bringing our total footprint in Australia to 51 sites. It is also pleasing to see an improvement in both our client and colleague Net Promoter Scores, which Paul will expand on later. We are also expecting to have further clarity on the Competition and Markets Authority review with the publication of their provisional decision later this month.
We have a clear strategy for growth focused on continued high standards of clinical care, delivering excellent client service and supporting a highly skilled team of colleagues to provide this care and service. I am pleased with the progress made over the past financial year, which positions CVS well for future growth. Our focus is to provide a great veterinary experience, which we believe is centered around the trust shared between us, the client, and their animals. That trust is underpinned by understanding the client's requirements, the care which is provided, and the quality of service. We continue to look at ways to reinforce those values and improve on the client experience. We are confident that this focus on people and clinical care will continue to drive organic growth.
This will be augmented through further acquisitions with significant opportunity in Australia and the U.K. post the conclusion of the CMA investigation. We continue to operate in two attractive markets, which offer significant further opportunity. In the U.K., there remains white space where we can augment our current footprint with further high-quality acquisitions following the conclusion of the CMA process. In Australia, I'm delighted that within the past two years we have firmly established our presence and now operate 51 sites across major urban conurbations. Our investment is delivering returns with good like-for-like performance and Adjusted EBITDA margins in excess of 25%. Importantly, we have built on our reputation as a people-focused business committed to high-quality clinical care. We have focused on acquiring larger, high-quality, small animal first opinion practices with strong management teams, great facilities, and an excellent reputation.
As already mentioned, since the financial year end, we have completed a further two acquisitions comprising eight sites, one of which is the marquee acquisition of Sydney Animal Hospital, a multi-site practice group in Sydney which has a fantastic reputation. Throughout the CMA merger investigation, we have adopted a proactive approach in liaising with the CMA. This is to both help the CMA understand the sector and some of the challenges we face, but importantly to ensure an appropriate outcome in the best interests of consumers. We have sought to engage proactively with the CMA at every opportunity. The CMA formally extended its timetable in the summer and initially said it planned to publish its provisional decision in September 2025.
In light of this, we consciously decided to delay the announcement of these results so that we could both digest its provisional decision and also discuss the proposed remedies in our forthcoming investor roadshow. It's disappointing that there has been a further delay with a provisional decision now expected in the middle of this month, but we look forward to reviewing this shortly. We will continue to support the CMA in the remainder of its investigation and have advanced plans in place to implement the final remedies package, which we anticipate will include joint branding of our practices and the publishing of standardized price lists. I will now pass over to Robin, who will provide an update on our financials.
Thanks, Richard. I'm pleased that 2025 marked another year of growth and a year in which continued investment places the group well for the future. Revenue grew 5.4% to GBP 673.2 million, benefiting from acquisitions made during the current and prior year and like-for-like sales growth of 0.2%. Our like-for-like sales growth is adjusted for working days and on a constant currency basis. It excludes current year acquisitions and it only includes prior year acquisitions from the same month this year as they were acquired in the previous year. Like-for-like sales performance for much of the year was impacted by softer market conditions in the U.K., most notably within our online retail business division and our laboratories division, which experienced a loss of a major customer.
Our veterinary practice division was also impacted by continued economic pressures, the CMA investigation, and the COVID-19 puppies and kittens now in their young, healthy adult stage of life. It was pleasing, however, to see a return to like-for-like growth in the second half of the year, and this positive momentum has continued into full year 2026. Adjusted EBITDA grew 9.4% to GBP 134.6 million, benefiting from top-line revenue growth and disciplined cost management. Adjusted EBITDA margin of 20% was up 0.7 percentage points versus prior year, despite the increase in National Living Wage and National Minimum Wage, alongside increases in employer National Insurance contributions from April 2025. CVS estimates the annualized impact of these to be in the region of GBP 3 million and GBP 8 million, respectively, but is confident that cost synergies and growth will help to offset the impact of these on the group.
During the year, GBP 15.1 million was recognized in respect of net research and development expenditure tax credits, which was up to GBP 12.8 million in the prior year. Free cash flow increased 22.2% to GBP 72.2 million due to favorable adjusted operating cash conversion, offset by an increase in interest expense of GBP 4.6 million, following an increase in both the cost of borrowing and average drawn debt during the year in support of our continued commitment to invest in our practices and acquisitions. Operating cash conversion was 76.9%, which was up 6.8 percentage points on the prior year and ahead of our stated ambition of greater than 70% operating cash conversion.
With a robust cash generation coupled with the proceeds received for the divestment of the crematory operations, only partially offset by the GBP 63.8 million spent across acquisitions and capital expenditure, leverage fell to 1.18 x, with a decrease in net bank borrowings of GBP 36.6 million -GBP 131.4 million. Leverage is well below our two times target ceiling and provides adequate firepower to continue with our ongoing expansion in Australia. An Adjusted EPS of GBP 80.1 was down GBP 0.032, impacted by an increase in the effective tax rate, an increase in depreciation from capital investment in recent years, and an increase in finance expense from increases in both cost of borrowing and average drawn debt during the year.
We continue to invest in our practice facilities, clinical equipment, and technology, with total capital expenditure of GBP 33.2 million for continuing operations, in line with our Capital Markets Day commitment to invest between GBP 30 million and GBP 50 million per annum. Included in this is our work to modernize our IT infrastructure to support modern cloud-based IT solutions. Consideration for acquisitions of GBP 30.6 million primarily represents continued momentum in Australia, with a further seven acquisitions of 15 practice sites with performance in line with expectations. The group's short-term expansion focus will be in Australia, where there is a strong pipeline of exciting opportunities, and there is an expectation that U.K. acquisitions may open up following the end of the CMA investigation. Revenue increased to GBP 673.2 million from GBP 638.7 million, benefiting from acquisitions. GBP 52.1 million of revenue in the year was generated from Australia.
The veterinary practice division comprises our companion animal, referrals, farm animal, and equine veterinary practices, as well as our buying groups, VetDirect, and MiPe t insurance. This division delivered 6.7% growth in revenue, benefiting from acquisitions. Performance in the year was impacted by continued economic pressures, the CMA investigation, and the COVID-19 puppy and kitten cohort in its young, healthy adult stage of life. It was pleasing, however, to see a return to like-for-like growth in the second half of the year, and as the COVID-19 puppies and kittens age, the more veterinary assistance they will require. The laboratories division provides analyzers in practice, which supports testing in-house, for which we supply the reagents for the tests and diagnostic testing services. Revenue in this division decreased 0.6%, impacted by reduced volume of diagnostic testing of circa 14% following the loss of a key client.
Concentration is weaker across our remaining external clients, and it is pleasing to see a return to growth post that client loss. And our online retail business had a challenging year impacted by customers trading down for more expensive clinical and life stage diets and disruption from migration to a new website. I'm pleased to say the momentum seen across the group in the second half has continued into full year 2026. We've seen good EBITDA performance, with Adjusted EBITDA increasing 9.4% to GBP 134.6 million from GBP 123 million, benefiting from increased revenue from acquisitions alongside disciplined cost management. Adjusted EBITDA margin increased to 20% from 19.3%, both benefiting from increased revenue in the year coupled by disciplined cost management and a GBP 2.3 million increase in net research and development expenditure tax credits recognized.
Employment wage inflation, additional National Insurance costs, and investment in colleagues resulted in employment costs as a percentage of revenue increasing to 52.2% from 51.9%, and other costs as a percentage of revenue decreased to 6.2% from 6.5%, with inflationary pressures partially offset by a GBP 2.3 million increase in net research and development expenditure credits to GBP 15.1 million. The group is targeting further cost synergies and efficiencies to protect Adjusted EBITDA margin following the U.K. budget changes in November 2024, which resulted in increased employment costs. I'm pleased with the underlying progress made across full year 2025. As pets age, they will require more medical intervention alongside improved customer experience and potential new revenue opportunities opened up with our new practice management system. We look forward to delivering further growth over the medium-longer term, and full year 2026 is off to a good start.
We have a healthy balance sheet with GBP 350 million of debt facility and headroom within our leverage target ceiling and therefore capital available to support our investment opportunities. Our stated ambition is to invest GBP 30 million- GBP 50 million per annum on capital investment and over GBP 50 million on acquisitions, which for now continues to be focused in Australia. The group continues to generate healthy cash flows with full year operating cash conversion of 76.9% ahead of our Capital Markets Day ambition of 70%. With robust cash generation coupled with the proceeds received from the divestment of the crematory operations, only partially offset by the GBP 63.8 million spent across acquisitions and capital expenditure, leverage fell to 1.18x , with a decrease in net bank borrowings of GBP 36.6 million- GBP 131.4 million.
Leverage is well below our two times target ceiling and provides an adequate firepower to continue with our ongoing expansion in Australia. We have committed bank facilities to February 2028 and have also hedged GBP 100 million of debt, swapping variable SONIA to fixed, securing an interest rate, including current margin, of circa 5.5% through to February 2028. We continue to assess each of our investment opportunities against our disciplined investment criteria, ensuring long-term returns remain above 10% IRR. Our investments are value accretive and deliver an attractive return on investment in excess of our cost of capital. Our investment unlocks opportunities, investment in facilities and equipment, support retention and ability to attract clinical talent, as well as allowing us to provide the care our clients require.
In addition, we have built our new cloud-based practice management system, launching online booking across our companion animal practices, with the ability of one-click repeat prescriptions and reminders. We look forward to enhancing the client experience further with technology in the year to come. I will now pass to Paul, our Chief Veterinary Officer, to update you on our strategic progress.
Thank you, Robin. Across our practices, both in the U.K. and Australia, we are focused on supporting our trusted and compelling client proposition, helping us to provide the best possible care to animals. This trust is based on providing fantastic care for our clients and their animals, ensuring that we take the time to build strong relationships between professionals and owners and show that we care for them and how their experience with us feels. Ensuring that our owners feel the value of this care through transparency and a contextualized care approach, and demonstrating that we have a consistent quality of service where we provide the right clinical expertise in the right way to meet individual owner needs. This approach builds on the clinical excellence of our colleagues and ensures it caters for every owner's needs so that we are the trusted partner for any pet and owner.
We've undertaken various consumer surveys and focus groups over the past 12 months to better understand how U.K. pet owners want to access care for their pets, and although there is a perception of a difference between corporate and independent vets, there is a clear view that pet owners understand that there are benefits when their vet has access to and support from the resources and broad clinical expertise available in a larger group. CVS has an opportunity to showcase these benefits over the coming year. Indeed, ensuring that we combine the perceived strengths of both the corporate and independent models can further enhance our client satisfaction, which I'm proud to say excelled further with a client Net Promoter Score now 78.9. We believe our focus on enhancing the client experience and approach to shared decision-making in the consultation room is driving this excellent score.
We're pleased that clients continue to value the service that we provide. Our focus on high-quality but contextualized clinical care, along with investment in our practice facilities, provides a safe and reassuring environment for our clients and exceptional care for animals that is reflected in our strong client Net Promoter Score. We remain committed to our vision to be the veterinary company people most want to work for, and our colleagues set us apart. As we continue to grow our business, we have once again increased the number of vets that we employed. We've seen an increase in the average number of vets we employed in financial year 2025 compared to financial year 2024 of 4.5%, excluding acquisitions. At CVS, we are renowned for the support we provide our practice teams. During the year, we launched a handy pocket resource called MiGuide.
This clinical resource sits in a well-structured portal that can be accessed easily on a phone. It provides our clinical colleagues with instant access to clinical guidelines, advice on emergency care, and tools to support decision-making. MiGuide improves confidence in evidence-based recommendations to clients and, most importantly, should help our colleagues to improve clinical outcomes and also that client experience. Given the challenges across the veterinary sector, alongside the continued negative publicity from the CMA investigation, we are pleased to see that our employee Net Promoter Score improved in the year to plus 3.1. Now, although we are pleased with this improvement, there is always more that we can do. Myself and my executive colleagues continue to work with our practice teams to improve their experience of being part of the CVS team, and we are looking for a further improvement in FY 2026 to positive 5.0.
I'm also pleased to say, in the backdrop of continued sector scrutiny, that our colleague attrition has remained stable over the year, showing that we continue to provide the support our colleagues are looking for. Our facilities not only provide great working spaces for our teams, but also welcoming areas for our clients. In the year, we spent GBP 33.2 million on capital investment, of which GBP 10.8 million was spent on property relocations and refurbishment. On this slide, we want to demonstrate the benefits of this investment. As Robin mentioned, all of our investment opportunities are assessed against a disciplined hurdle rate of greater than 10% IRR. However, it's not just financial returns that our investments deliver. A practice-wide refurbishment, or where required, full relocation can benefit the clinical offering that practice teams and clients experience over the long term.
We typically see larger footprints providing additional space to address the client demand for our services, improved clinical activity, for example, through imaging equipment or dental equipment or endoscopy. These new facilities provide a positive environment for our clinical teams to work in, which not only can improve their well-being, but also attract further clinicians and provide secure business continuity over the longer term. A sometimes smaller investment, but one just as exciting for our practice teams, is new state-of-the-art equipment. It's rewarding for all involved to enhance what could be an underserved clinical provision to their local area, potentially improving patient outcomes. A simple upgrade of an ultrasound machine can transform a team's ability to care for their patients. We remain committed to spending between GBP 30 million- GBP 50 million per annum on CapEx to further improve our facilities, equipment, and technology.
Our investment provides an opportunity for growth, improves well-being and satisfaction across our teams, and provides a pleasant and welcoming environment for our clients and their animals, and helps us to deliver individualized clinical care. Our fourth strategic pillar is that we take our responsibilities seriously. This spans across everything that we do as a company and as a profession. Today, we release our fourth sustainability report, updating our stakeholders on our progress against our four sustainability pillars: care for our planet, care for our people, care for our clients and their animals, and care for our communities. Our global team of environmental champions have once again helped us to reduce our carbon and energy use.
We've created new career pathways across many roles, and we are piloting AI technology to help write clinical notes, which frees up time to focus on clients' needs alongside seeing a sustained reduction in prescribing the highest priority critically important antibiotics. I'll now pass over to Richard for some closing remarks.
Thank you, Paul. While the past year has had its challenges, we have successfully laid the foundations for further growth, and CVS is well positioned to continue to compete successfully and to deliver enhanced value to all stakeholders. Our established platform in Australia is delivering, and we are confident of making further acquisitions in the current financial year in line with our strict investment criteria. We have already completed two further acquisitions this year for combined consideration of circa GBP 23 million. We are well capitalized with a healthy balance sheet, headroom in both our committed undrawn facilities and our leverage, and we have continued strong operating cash flows.
The new financial year is off to a solid start, and on the assumption of an improved economic backdrop, certainty following the conclusion of the CMA market investigation, and as the COVID-19 cohort of puppies and kittens age and naturally require increased veterinary care, our medium-term ambition remains to deliver like-for-like growth of between 4% and 8%. The financial results announced today and our future growth opportunities reflect the continued dedication and professionalism of our colleagues. I would like to take this opportunity to thank them all for their support and commitment to providing great client and animal care, and I look forward to sharing further success in 2026 and beyond.