Morning, everyone, welcome to this live stream of the CVS Group interim results, following the release of those results early this morning. I'm Richard Fairman, CEO of CVS. I'm joined by Robin Alfonso, our Chief Financial Officer, and Paul Higgs, our Chief Veterinary Officer. We delivered further growth in both revenue and EBITDA in the period against a backdrop of weak consumer confidence in the U.K. Importantly, we've also taken a number of steps to position the group well for the future with our new CVS Vets joint branding live, our step up to the Main Market complete, and further successful growth in Australia. Revenue in the period increased by 5.8% over the corresponding period in the previous year to GBP 356.9 million.
Like-for-like growth improved to 2.7% in the period, with this growth achieved across all three divisions. Adjusted EBITDA increased by 3.9% to GBP 67.7 million, with EBITDA margin of 19% achieved against a backdrop of some inflationary cost pressures. Adjusted operating cash conversion was 75% in the period, and this, together with our disciplined approach to investment, resulted in leverage of 1.41x at the end of December. We completed two Australia veterinary practice acquisitions in the period, and we've completed a further two acquisitions in the second half so far, and this takes us to 33 practices operating across 55 sites.
We welcome Defra's consultation on reform to the Veterinary Surgeons Act 1966, which is clearly long overdue, and we look forward to the CMA's publication of their final decision in the coming weeks. The strong market fundamentals remain attractive. We have a clear strategy for growth, and we enter 2026 well-positioned for future success. I'd now like to ask, open the floor to questions from analysts, and because this call is being live streamed, as you ask your questions, I think it would be helpful for everyone if you could state your name and your broking firm. Okay, thank you. Charles?
Hello, Charles Weston from RBC. A couple of questions to kick off, please. First of all, in the statement and in the presentation, you talked about price elasticity, experimentation in Animed, and obviously, you've just opened a new website. Perhaps can you talk about what your findings were there, and also the conversion rate improvement that you talked about? If you can give us a bit of color about that. Secondly, in Australia, can you help us understand the Australian Competition Authority's new regime, and how this might impact your M&A activity in the region? Thank you.
Yeah. Thank you, Charles. Robin, perhaps you can pick up the Animed question, and I'll pick up the Australia one.
Yeah, as you know, we replatformed last year. We've seen good conversion rate uptick from that replatforming. I think what did happen was we ran a number of price elasticity tests, which were damaging to margins, and when you reduce prices, it does take a little bit of time online to bring those prices back up. Although we had a tough first half of the year, some of that was price elasticity, some of it was the fact that what we have seen is some, for the kind of cost living, kind of economic backdrop, people have been trading down from premium pet food to cheaper alternatives. We have confidence that we will deliver profit in the second half of the year because those prices are reversed. We're seeing good conversion rate.
We're seeing good visit numbers to our website, and we are confident with improvement into the second half.
In terms of Australia, we have 55 practice sites, and as you know, our focus is acquiring those sites in large kind of urban areas, so typically, the big cities in Australia. We've already engaged with the ACCC on a few occasions just to make sure that local practices that we're looking to acquire do not kind of cause an issue in terms of local competition. It would be quite unusual if they did, clearly, with such low scale currently. The ACCC have introduced a new regime, which applies to all companies, not just the veterinary sector, so this is a kind of industry-wide. It adds a process to our acquisitions, but it's not onerous.
For all groups, once they reach a certain size, that kind of process becomes mandatory. There's a voluntary element at the moment, but it will become mandatory at some point. We're not concerned by that. It's something we're fully embraced, and it won't actually delay acquisitions, we don't think.
It's worth adding, I think, we had followed that process for some of our acquisitions already. The big difference being that historically, you wouldn't have seen it wasn't public. Now in the current regime, it becomes more of a public process.
Okay. Thank you.
Thanks, Charles. Thanks.
Hi, it's Andrew Whitney from Investec. Two questions, if I may. Just looking at the business ex the wage inflation-
Yeah
I think you can broadly get to about 150 basis points of margin on EBITDA. Then if you adjust for that, you get to a double-digit EBITDA growth, half on half, effectively, off of the back of maybe 5% or 6% top line growth. Is that the amount of leverage that you can get, operational leverage that you can get in the business? When the extra costs annualize, and we're still getting 6%+ top line, Is that what we should be expecting from an EBITDA perspective?
I guess, to your point, Andrew, the national insurance increase and the national minimum wage increase absolutely impacted margins by about 1% and 1.5% in the first half. If it wasn't for that inflationary pressure, we would have seen margins improve. We are confident we can improve margins. We've talked about the 19%-23% medium-term guidance, and we still are confident we can improve margins. Obviously, easier said than done in the current economic backdrop, but there's certainly a focus.
Thanks. I think it was in the recording, you talked about the potential for U.K. acquisitions coming back at some stage. I think you were flagging maybe on conclusion, the final conclusion of the CMA in May, that there may be some activity. Is it really a CMA consideration, or are there people out there coming to you and saying that, "We've been sort of trapped in for a bit, and have you thought about doing some acquisitions in the U.K.?" Is it literally dependent on what happens on the final readout of the CMA?
I'd say it's not dependent on the CMA outcome. We're very, very confident in our ability to make further acquisitions. The CMA, both their mergers team and the markets team, more recently, have done work in the sector, and they've concluded that there is no local competition issue. They've also consistently said that a local share of less than 30% is fine. Anything above that might be problematic and anti-competitive. We have a less than 9% share nationally, so clearly, lots of white space for us to actually do acquisitions. The way I'd describe the market at the moment, I think there's pent-up demand from potential sellers, so independent owners, haven't really had a market to sell into in the last couple of years.
Some are also frustrated by the CMA process, and Paul can expand on that. There haven't been the buyers, we don't want to rush back to buying in the U.K. at the multiples we used to. It wouldn't make sense for us when we can buy really attractive practices in Australia at 7x or 8x EBITDA. We have had some early conversations with potential vendors, but we don't currently have a pipeline of any offers accepted, it's something we are looking at. We're not rushing into it because the multiples will have to come down from where they were previously for it to make financial sense. Yeah.
Thank you.
Thanks, Andrew. Andrew?
Thank you. It's Andrew Ford from Peel Hunt. Just a quick question, and I know, Robin, you don't like to talk too much about like-for-like, given, you know, where the business sort of used to be. That's, you know, that number is still sort of a question mark for some people. When you look at, it's the softer things that are coming through later, sort of post-CMA, that are gonna be more impactful. I know, Paul, you spoke about that, you know, previously. I just wondered how far progressed you are, you think, with, you know, educating the, I know that it's difficult to educate the public, but educating the vets in terms of, you know, giving them back that confidence that's maybe been eroded.
I know the narrative has been a bit unhelpful from the regulators on, you know, an ongoing basis. Just sort of where do you see yourselves at on that journey of rebuilding that confidence? Which I, my understanding is that's one of the sort of key elements of that like-for-like number.
I think for the profession, it definitely, I think the profession has recognized that it hasn't done a great job of sharing the value of what we do. I think that recognition has changed over the past couple of years. The CMA process has absolutely brought that to the fore for all veterinary professionals, that we need to be clearer, we need to be more confident with how we, how we share, what the options are, what the value of that is, and have proper conversations. Actually, I think the profession has come round to that. In terms of how that changes behavior in the consulting room, there is, you know, there is always more to do.
Every year, we bring in new, newly qualified vets who are fantastic, but they haven't got the lived experience that helps them to have the conversations in the consulting room. Over the last 12 months, we've been doing our confidence in the consulting room training, which is really about changing the focus for the outcome of a consultation to being a shared decision, rather than necessarily always a diagnosis. That's gonna take some time, and there's some behavior change there. Actually, I think we're doing pretty well with that. It's been a very well-received set of training, actually. I think that confidence is growing, but it will take some time.
Great. Thank you. And the other element of, you know, of the commentary you put around the like-for-likes was the variance between practices, and I think it's the slightly better performing, you know, historically better performing practices that have recovered better. Can you give us a bit of detail as to why that is? And again, if there's a, you know, what you're doing to, in order to rectify the sort of the less performing ones, is it just, you know, keep doing the same thing, or is it they've always had a different mix, you know, of, yeah, of service?
Yeah, I guess the way I would kind of articulate it is the practice is mixed, you know, performance is mixed across practices, and that's not just across practices, but across days as well. There are some really strong days and some less strong days. I think demand for high-end care and also when animals get ill or injured, invariably clients bring them in for treatment, and we've seen our referral hospitals perform very well. We've seen those kind of more emergency cases. You know, the demand there is still very strong. Where we've seen probably softer demand is more of the routine, preventative care.
As pet owners, if they're worried about, you know, cost of living or have less confidence, then they may delay kind of the routine appointments, and we certainly think that is happening across the sector. This is not just a CVS factor. We're seeing the same feedback across the industry. There are things we can try and do to influence consumers and bring them in, and we are actively doing so. Performance is mixed. The investment we've made in improving a number of our sites over the last few years, undoubtedly that investment is giving us good returns, and we are seeing really strong performance with some of those best practices. It's just the performance is mixed and, yeah, but we.
Yeah, that reflects the lower confidence, I think, at the moment in the U.K.
I'm just going to add. Our focus is on how we kind of engage with the clients. I think Paul kind of touched on the value of our service, but it's how do we make it very easy for people to access our services? How do we reinforce the value of the services that we have available to them? That speaks to some of the things we've done around our website, around online booking, around our thoughts around how we want to better communicate with our clients going forward. I think there's lots of things that we are focused on that I think will stand us in good stead going forward.
They take some time to bed down and embed, I think we are making some positive changes that will support that trajectory going forward.
Very helpful. Sorry, just one more sort of very cheeky question. You know, I know, you know, the U.K . M&A used to be a huge sort of core pillar of CVS, you've already sort of spoken about, you know, the speed of that coming back. I would kind of quite quick, I know it's an unfair question, what's the speed do you think that expectation multiple will sort of, you know, that gap will close, you know, with the implementation of other, you know, the CMA requirements? Yeah, what's your sort of expectation on getting back into that so you can bring, you know, new practices into the fold of all the good things you've been doing in the background?
Yeah, I think U.K. acquisitions are definitely back on the table, and I'd hope we can make some later this calendar year, but we're not gonna acquire practices for the sake of it. It has to be really good quality practices. In Australia, we've obviously entered the market two and a half years ago. We've been very disciplined in our approach, and we've acquired some very high-quality practices that are performing well, and also delivering margins that are very accretive. That disciplined approach has served us well, and that same approach will apply to the U.K. as well.
Thank you.
Yeah. Thanks, Andrew. James?
Morning, all. James Bayliss from Berenberg. Two, if I may. You've rebranded some of your practices, which is in part in response to some of the CMA transparency measure considerations, but more widely, you've also launched more of a sense of internal corporate identity. Any comments really on how that's been received from your staff and clientele? Sorry, second one, perhaps, any comments on the wider recruitment backdrop in terms of provision of nurses and access to staff?
Yeah, maybe, Paul, you can pick the second one up, but also comment on the first. In terms of the rebranding, yeah, we have now rebranded about 60 of our sites, and we plan to rebrand all of our companion animal practices in the U.K. by the end of June. That is a joint branding, so we have CVS Vets alongside the local practice name. The response from colleagues has been super positive. They really embrace the identity, and having a joint brand leads to the ability for us to do more central marketing as well. Going back to Andrew's question, that's another way for us to kind of drive more footfall into practices. Feedback from clients has been positive as well.
I mean, they typically are aware that the practice is part of the CVS Group, and they haven't really seen any change from that. That process is going well. And you've seen in the investor presentation the new branding and some of the new strap lines and marketing messages, which I think are kind of fresh and hopefully will benefit us in that kind of marketing approach. Paul?
Yeah, I think you're right, and I think it's interesting you pick up that kind of internal identity of the teams. I really think that's something our colleagues have been drawn to. Probably the message internally has been very much that this is the right time. You know, CMA aside, we've been spending years building pride and recognition of what it means to be under the care of CVS, either as a colleague or as a client or as an animal, and I think that really now has an identity that our colleagues feel is quite tangible and something they want to get behind. So the message we've had internally is, you know, this is the right time. For some, it's almost about time, you know?
They've really got behind it, and you can see that in the way that they're communicating out to clients who ask them the question, "Oh, I didn't realize you were part of a corporate group," for example, and they say, "Absolutely. We've been part of CVS for a really long time. You won't have noticed any change in the recent weeks because you've still got the great team, you've still got the same quality of care that we've been providing you, with you, for you for a long time." The team's absolutely been behind it. It's interesting you pick up that identity, 'cause that's probably the key part to the success of the rebrand. It's not the signage, it's about who we are. James, would you remind me of your second question? Sorry.
The second question is around the supply of vets and nurses as well, and things there are improving, but I'll let Paul kind of expand.
I think we recognize, and the Royal College published a Workforce Summit document around about possibly this time last year, which identified the fact that certainly in companion animal, we're seeing a steady increase in the number of vets available compared to the roles available, and the same for nurses. Nurses are probably catching up quicker than vets, and the Workforce Summit would suggest that there won't be a workforce shortage in veterinary nurses within the next couple of years. I think where we have fantastic practices, we don't experience a workforce shortage because they are desirable places for our colleagues to work.
I think similarly, our experience is that we're seeing those places that were maybe are harder to recruit, we get 1 candidate for a role, we're now seeing multiple candidates applying to a role, and I think that's what we're experiencing, is that, you know, there are still some pockets of challenge, but actually overall, we're seeing a change when we go out to recruit and also improved retention as well.
I would just add, we I mean, there's a bit of kind of the market for vets and nurses. There's a bit about what we've done around our own employee brand, our own proposition. What I would say is that, you know, you can see in the stats, we've got improving employee NPS. Our attrition is stable, if not improving slightly. So I think some of what we are benefiting from is some of the work and effort we've put into our focus on people, as well as some benefit from kind of the market for vets and nurses.
Thanks.
Thanks, James. Any more questions? Seb.
Hi there. Apologies for being late. Sorry, these questions have been asked already. Just start off with one on the preparation work for the CMA. Obviously, you've talked about kind of the rebranding the sites and that type of stuff. I'm just wondering if you could kind of just give us a little bit more detail on some of the work you're doing to prep for the potential remedies, just remind us of how long you have to comply with the remedies, 'cause I think it's slightly different for smaller and larger operators.
Just a brief recap on where we are with the CMA process. The CMA published their provisional decision in October last year. And as you'll be aware, that reduced the range of remedies from 28 they were considering last May, when they published their working paper, to 21 remedies, plus a recommendation for government to consider reform of the Veterinary Surgeons Act. The latter recommendation is now underway, and DEFRA have started that consultation. But the 21 remedies essentially comprise things like joint branding or being very clear that your practice is part of a corporate group. Transparency of pricing, so having a published price list. And many remedies that we already comply with, such as making the Royal College of Veterinary Surgeons' Practice Standards Scheme mandatory.
All of our practices fully comply with that. Making sure that there's a complaints process that's very visible to the clients and accessible, including access to mediation. We already fully comply with that. Paul can maybe expand on some of the other remedies. I guess the two big ones are joint branding, so well on the way with that. We've got 60 of our U.K. companion animal practices already live, displaying that joint branding as of last Friday, and a further number to be rebranded this week and over the coming weeks, and that process will be fully complete by the end of June. We published price lists on our practice websites at the back end of last year, again, that remedy is fully live.
In terms of the timetable from here, the CMA have said they'll publish their final decision in March. They have until the 22nd of May to do so, and that's the drop-dead date under statute for them to do so. We are expecting that decision imminently. That will then explain the final list of remedies. Then there's a further round of consultation with the CMA around the implementation of those remedies, and that then results in their final order, which is when the remedies legally come into force, and that final order, we're told, can be up to 6 months after the final decision. Then for corporate groups, we expect to be given 3 months to implement those remedies. For us, that might not be necessary because hopefully, we've already implemented them all.
Independent practices might have up to 6 months to implement. Yet to be seen. It will obviously depend on what they say in their final decision and their final order. In, for some of those remedies, it could be a year still for some practices to implement them.
Have you internally costed what you think it's gonna cost you to comply with the CMA kind of proposals as set out?
Yeah. Robin?
Yeah. In terms of the signage, I think we've estimated rough, circa GBP 6 million to rebrand all of our sites. That cost for us is, I believe, is an exceptional cost. Sorry, I shouldn't touch the mic. Exceptional cost because we wouldn't have otherwise rebranded the sites had it not been for the CMA. If it's not exceptional, then it'll be a capital expenditure.
Ongoing operating costs, anything there, or is that just within the general-
Minimal, I think. Yeah, we've already got price, prices live. We are automating that process, so it's less of a manual process. We are ready to feed those prices into the central, yeah, RCVS Find a Vet practice website, so consumers can kind of access them and compare them centrally. Yeah, we're not expecting, I think, a significant ongoing operational cost. I think, reform of the Veterinary Surgeons Act might lead to increased regulation, and indeed, Paul, as a vet, is regulated by the Royal College of Veterinary Surgeons. Rob and I, as directors of a corporate veterinary group, are not, because we're not vets. I would expect there'll be increased regulatory costs in due course.
I would imagine there'll be, yeah, they won't be significant. There will be some operational impact, but minimum, I would imagine.
Kind of the only other impact, I mean, obviously within the, I think we outlined transparency, regulatory. There was a focus. There is a focus on the purchase of drugs in practices, and there is this remedy around a price cap on prescription fees. I think we've said in the past that, you know, our prescription fees are slightly, are currently charged higher than that, but the impact for us would be small. There's a small increase in fees to offset the impact of that.
Just 1 last question. I'll kind of raise this 1 slightly cautiously, but, just trying to understand a little bit what's happened to your pricing over the last year. In that like-for-likes, is there a pricing element in there, or have you largely held back on pricing, given what's going on with the CMA?
There has been some pricing in that like-for-like growth and of the like-for-like growth of 2.7%, that's obviously a group number. That reflects a slightly higher performance in Australia, where we're acquiring very good practices there. They're performing very well. It also reflects improvement in Animed Direct and labs and strong performance in referrals. There's a mixed element to that 2.7%. In U.K. companion animal practices, the like-for-like growth is largely coming from price. Clearly, volumes are flat, if not slightly negative. Thanks, Seb. Any other questions then? Charles.
Apologies if it's already been asked or covered. Just following on the pricing commentary, with the increased visibility, have you seen any commentary or impact with either pet owners or vets?
No. Maybe Paul can talk about vets and the confidence of vets, which we think is returning. Our prices have been live for a number of weeks now, we haven't seen any negative client impact from that. Across the sector, we know that clients choose a vet practice and tend to stick with that practice, so we haven't seen any change in switching either.
No, I think that what's important to recognize is what we're hearing from our clients is not always about the price. They want to know what the price is. It's about fair and transparent pricing and demonstration of value. I think in part, having your prices, you know, very clear, benefits around that, and they can then go make that choice if that's what they want. As Richard said, the majority of pet owners choose their veterinary practice based upon what they hear about the quality of the experience that they get there, the locality, even down to, does it have parking? Price becomes a factor for some, but for many, it's an important thing that they need to know about. We haven't seen a huge impact, no.
You've done some price activity on Animed Direct. Do you want to just run through sort of what you've done and what the impact has been?
Yeah, maybe Robin can answer that.
Just to answer this, apologies for those that have heard the answer. I suppose through Animed Direct, what we have said is, I suppose the cost of living crisis has had an impact on performance within online retail. People are trading down from premium pet food to more to cheaper alternatives. That's a kind of some contextual backdrop. We have replatformed the website. It is actually performing well. We've seen an improvement in visit numbers and improvement in conversion rate. What we had done, however, during the period, was do some price elasticity tests, which was margin eroding, and it didn't, it didn't work. We dropped the price, we didn't see any increase in revenue. We just saw a loss margin.
Well, as you reduce prices online, it takes time to build those prices back up. We've had to then suffer some pain through that period, and we're now back to the level where we feel comfortable in terms of delivering the right margin, which is why we have confidence that despite the first half being flat from a profitability perspective, it will be profitable into the second half.
Lastly, on the lab side, notably stronger like-for-like sales in labs than U.K. like-for-likes were. Do you want to just run through that? Have you won any customers? Is there some pricing in it, or is it all just outperforming the competition?
Lab's performing very well, and roughly half of our lab customers are external, so typically smaller independent practices, and the rest is obviously internal CVS practices. We've seen growth in the half year in both our own sales and also third-party sales. It probably goes back to a comment I made earlier, Charles, before you joined, that actually, we've seen the demand for kind of high-end procedures, continues to be strong and demand for, you know, the reactive care across the U.K. companion animal practices is also strong. That type of work probably leads to more lab tests being required. That's super positive.
There's modest price rises in the laboratory as there are in other areas of the business, but that's a volume driven increase, which is encouraging.
Are you winning any additional third-party business?
We are winning additional third-party independent practices. You recall, in the first half of the previous financial year, we saw the final impact of the loss of the Linnaeus contract, which was because Mars, who own Linnaeus, acquired two labs of their own and internalized that work as you would expect. Yeah, it's positive to see the lab business going back to growth.
Thank you, Charles.
Okay, any more questions in the room? Yeah, Charles.
Hi, Charles Weston from RBC. Just a couple of follow-ups, please. On the pricing transparency, I think that the CMA had talked about a huge variety, a big matrix of pricing.
Yeah.
I'm assuming you haven't published all of that yet, but perhaps could you just talk about how much more there might be to go in terms of that pricing transparency?
Yeah.
Just the second one on M&A. In terms of the pipeline, Robin, I think you'd sort of talked quite positively at the start of the year about the pipeline and potentially this being quite a big fiscal year in terms of making acquisitions. I think the first half was roughly in line with the first half of the prior year. Has it taken a bit longer for these to come through, or should we expect potentially a bigger second half?
I'll take the first one.
Yep.
I think on the price. The first point is, we haven't done the full amount, in part, because of the feedback that we have given to the CMA, and I know a number of other groups and independents have, that actually what's being requested from a pricing perspective is incredibly complex. Actually, it makes it more challenging to achieve what they want, what they want the pricing transparency to achieve, which is to enable clients to make a choice about their veterinary practice based on price, their veterinary practice. When it comes to whether or not it's a fair price or a reasonable price for the treatment, putting prices online is not helpful because there's so much complexity around that actually you need an individualized case price, and that's all about giving an accurate estimate and having good conversations.
If we look at what's been currently proposed in the preliminary decision report, actually it boils down to over 200 prices that you would have to list when you break it down to weight category and species, et cetera, which is just, it's going to be too complex for a client. It's not gonna be hard for us to do it, if that's what's required, in terms of putting that information out there. We just don't think that's very helpful from a transparency and helpful for clients. There have been conversations with the CMA through us, but also many other groups and independents. They have asked for further guidance around what would be a helpful price list. What we don't know is where they'll take that.
Until we see the final decision, we don't know where they're going to land. We would imagine it will be hopefully slightly less than was proposed. If it's what they proposed, it's not hard for us to then go out and get those prices out.
The prices we've currently displayed are the ones that we think benefit the clients most in making that decision. We would have to expand that list, as Paul said, if the CMA forces us to do 200 price points.
I suppose on M&A, Richard said earlier, we do take a very disciplined approach to the M&A we undertake, whether it's in the U.K. or in Australia. You know, we've said no to more opportunities than we said yes to. We are focused on those premium assets. I think when it comes to kind of volume, we've also said in the past, there are some delays. There's a lot of trusts in Australia, so there's a bit of restructuring that needs to happen prior to an acquisition. You know, when we invest, we're keen to negotiate a new lease. What we're not keen to do is make an asset and find out that we're not able to stay in that property for a period of time.
Landlords tend to, that tends to be a lengthy process in terms of being able to get that new lease agreed, often with third-party landlords. Having said that, though, you know, I think when we entered Australia, it was about GBP 80 million. We invested roughly for the year. Last year, we just did over GBP 30 billion. So far this year, it's GBP 35 billion. We do have strong pipeline. We're expecting to complete more acquisitions between now and the end of the year. In terms of that kind of 50+ ambition, I'll be keen to be investing that kind of volume between now and the end of the year.
Thank you, Charles.
I think we've now got some questions on the call. As you ask your questions, it'd be just helpful if you can state your name and where you're from, please.
If you would like to ask a question from your phone lines, please press star one on your telephone keypad, and please ensure your lines are unmuted locally, as you'll be prompted to when to ask your question. We've got a question from Colin Grant from Davy. Please go ahead, Colin.
Yeah, good morning, all. Yeah, it's Colin Grant here from Davy. Thanks for taking the question. Just in terms of Australia, you've given on slide six some information around the share of revenues and EBITDA coming from Australia, and if I plug in the numbers, it seems to suggest you're generating an EBITDA margin down there at around 30%, which is very strong and obviously well above the group level. Can you give us some flavor as to what the margin on the acquisitions that you made, what, you know, was when you acquired the businesses, and how those margins have progressed? Presumably, you've generated a lot of margin expansion since you've bought those practice sites down there. Maybe give us an outline as to the, you know, the expected trajectory of margins going forward. That'd be helpful. Thank you.
Thanks, Colin. I guess as we said previously, we are actively acquiring and focusing on really good quality practices in, you know, great locations, great facilities, and larger teams, so typically four or five vets or more. Those types of practices deliver good margins, whether they're in the U.K. or Australia. Because of that, the Australia margins across the Australia practices are, on average, higher than they are in the U.K., and I think we've spoken in the past about 25% or more EBITDA margins in Australia. In terms of the improvement of those margins post-acquisition, there are some cost synergies that we are targeting, albeit it is very early days, and those cost synergies come from choosing 1 preferred wholesaler, which all of our practices are now using in Australia.
That means we can negotiate slightly better discounts on drugs, obviously, the more volume we bring through our purchasing, the better those should become over time. We've also chosen. This was a clinical choice by the vendors collectively, a preferred laboratory provider and a preferred crematory provider. As we do in the U.K. as well, we also clinically decide the most appropriate drugs we should use for certain treatments, and we concentrate therefore our spend in a limited number of drugs, which also improves our ability to negotiate rebates from those manufacturers. There are cost synergies that are starting to be delivered, but overall, they're not that significant at the moment, but we do expect them to grow in due course.
I'll just hand over to Paul, because the clinical focus we've adopted so well in the U.K. is also translating to Australia, and Paul has set up various clinical committees to make sure that we continue to drive that clinical improvement.
I think probably just simply it's just worth saying that there is real appetite across our Australia teams to have a collaborative approach to how we develop clinically to delivering great quality of care. There is an awareness around the way in which we, for example, the dedicated and preferred drugs list that Richard referred to, about the importance that we don't limit clinical decision-making, but that actually, when we do look at those drugs, that we can give the best advice to our colleagues. They're confident about the reason why we have chosen certain options for them, so. There's real appetite, absolutely, to be collaborative, in the Australia teams at the moment.
Sorry, it's just also worth adding, I mean, those, Colin, that would be a practice margin that you're calculating, so there will be some cost at held centrally to help support those practices run. If you're comparing it from a kind of a practice margin to a group margin, there'll be some central costs associated with running those practices.
Okay, great. That's very helpful. Thank you.
Thanks, Colin.
Good. There are no further questions from phone lines. I'll hand back over to the room for closing remarks.
Okay. Well, thank you all for joining today's presentation. Thank you to all of our shareholders joining the call for your continued support. We really appreciate it. I'd also like to close, though, by thanking our team of CVS colleagues, whose outstanding contribution and dedication in providing great care to our clients and their animals is the core of everything we do at CVS, so really appreciate their support. I look forward to sharing further success in the future. Thank you for joining today's presentation. Thank you.