Welcome to this presentation of CVS Group's interim results for the sixth-month period to December 2025. I'm Richard Fairman, CEO. Later, you will also hear from Robin Alfonso, our Chief Financial Officer, and Paul Higgs, our Chief Veterinary Officer. Our purpose at CVS is to give the best possible care to as many animals as possible. I'm pleased to report on continued progress in the period. We completed our step up from AIM to the Main Market on the 29th of January, 2026. We hope this will bring benefits from improved liquidity, access to a more diverse pool of capital, index inclusion from March, and an increase in our profile as a company. We have launched our new consumer-facing UK companion animal joint brand under CVS Vets. You will see this reflected in this presentation.
This reflects the care, value, and service which we are renowned for as a trusted partner for our clients. Our presence in Australia is growing, with 3 acquisitions completed in the period, a further 2 practice acquisitions completed so far in the second half of the year. We have continued our disciplined capital investment, improving our facilities, clinical equipment, and technology, we are confident this investment will drive long-term growth in shareholder value. We welcome the launch by Defra of a consultation into the outdated Veterinary Surgeons Act from 1966. We are engaging with that process and encouraging CVS colleagues to do so, we look forward to the CMA's final decision in the coming weeks. We continue to trade in line with market expectations, Robin will provide further detail on our financial performance later.
Highlights for the first half include: revenue increased by 5.8% in the period, with growth across all divisions and like-for-like sales improving. Adjusted EBITDA increased by 3.9% to GBP 67.7 million. We invested GBP 17.5 million in capital expenditure maintained leverage at 1.41 times. We saw an improvement in both our client Net Promoter Score, which improved to 81.2, and our employee Net Promoter Score to 10. Having first entered Australia in July 2023, we have grown to 33 practices operating across 55 sites. Our Australia practices are performing well and now present circa 10% of group revenue. We have consciously focused on acquiring larger, high-quality, small animal, first-opinion practices with strong leadership teams, great facilities, and excellent reputations.
These practices tend to deliver higher margins, hence, Australia now represents circa 15% of group EBITDA. The Australian market has low levels of consolidation, we have a strong pipeline and an expectation that we will complete a number of further acquisitions in the remainder of this financial year. Whilst the level of corporate consolidation is higher in the U.K. at circa 60%, we have less than a 9% market share, we are confident there will be an opportunity for CVS to make further high-quality acquisitions following the conclusion of the CMA process. The CMA market investigation has been underway for the past 2.5 years, we have proactively engaged with the CMA throughout this time.
This is to both help the CMA understand the sector and some of the challenges, but importantly, to ensure an appropriate outcome in the best interests of consumers. The CMA announced their provisional decision in October 2025, and this has brought much-needed certainty. We do not agree with all of the CMA proposed remedies and feel some, such as the proposed price cap on prescription fees, are not justified by their findings. However, we are comfortable with them and have already implemented price lists on our practice websites and have commenced the rollout of our new joint branding. We will continue to support the CMA during the remainder of their investigation and look forward to the publication of their final decision, scheduled for the coming weeks. I will now pass over to Robin, who will provide further color on our financial performance in the period.
Thanks, Richard. H1 2026 marked a return to organic like-for-like sales growth, as well as growth from acquisitions, cementing a positive first-half performance. In May 2025, we sold our crematoria operations and have therefore restated our H1 2025 numbers to reflect these operations as discontinued. Revenue grew 5.8% to GBP 356.9 million, benefiting from acquisitions made in the current and prior year, with like-for-like growth of +2.7%. Our like-for-like sales growth is adjusted for working days and on a co-constant currency basis. It excludes current year acquisitions, and it only includes prior acquisitions from the same month this year as they were acquired in the previous year. We are pleased that revenue growth has been achieved across all divisions.
This growth was achieved despite continued softer market conditions in the U.K. and a backdrop of lower visit numbers in small animal practices. Client demand for our most advanced referral care remains strong. Adjusted EBITDA grew 3.9% to GBP 67.7 million, benefiting from increased revenue. An adjusted EBITDA margin of 19% was down 0.3 percentage points versus prior year, with cost efficiencies and synergies largely offsetting the increase in national living and national minimum wage, alongside increases in employers' national insurance contributions from April 2025, which have an annualized impact of circa GBP 4 million and GBP 8 million, respectively. Margin of 19% continues to be within our 19%-23% range ambition. During the period, GBP 7 million was recognized in respect of net research and development expenditure tax credits, which was the same as H1, 2025.
Free cash flow increased 16.2% to GBP 34.4 million due to the increase in adjusted EBITDA and favorable operating cash conversion, which was up 3.3 percentage points on H1, 2025, and in line with our stated ambition of greater than 70% operating cash conversion. With robust cash generation and a strong balance sheet, we've continued to invest in future growth through CapEx investment and further acquisitions. We also undertook a small share buyback to support the move to the Main Market, which concluded in January 2026. As a result of these investments, net bank borrowings increased to GBP 28.8 million since June 2025 to GBP 160.2 million, and leverage increased to 1.41 times.
Leverage is well below our 2 times target ceiling and provides firepower to continue with our ongoing expansion in Australia and the UK in due course. Adjusted EPS of GBP 0.402 was up GBP 0.022, benefiting from an increase in EBITDA. We continue to invest in our practice facilities, clinical equipment, and technology with total capital expenditure of GBP 17.5 million, and Paul will touch on these more later. Consideration for acquisitions of GBP 23.3 million represents continued momentum in Australia, with a further 2 acquisitions of 9 practice sites. Pleasingly, performance has been in line with expectations. The group's short-term expansion focus will be in Australia, where there is a strong pipeline of exciting opportunities. There may also be acquisition opportunities in the UK following the end of the CMA investigation.
Moving on to Slide 10, I'm pleased with the resilient EBITDA performance, which has been underpinned by growth and acquisitions. Revenue increased to GBP 356.9 million from GBP 337.3 million, benefiting from acquisitions and like-for-like growth of 2.7%. Australia now represents about 10% of group revenue. EBITDA increased to GBP 67.7 million from GBP 65.1 million, benefiting from revenue growth, with resilient adjusted EBITDA margin, which largely held up despite wage inflation, in addition to investments in online marketing and IT. We are pleased to have offset the vast majority of cost headwinds from the national insurance contributions and national living and minimum wage pressure, and deliver EBITDA margin within our stated range of between 19%-23%.
We continue to target investments, primarily in practice facilities and equipment, to expand margins over the longer term. We've seen revenue growth across all our divisions. The Veterinary Practice division comprises our companion animal, referrals, farm animal, and equine veterinary practices, as well as our buying groups, Vet Direct and MiPet Cover. This division delivered 5.4% growth in revenue, benefiting from acquisitions and a return to like-for-like growth, despite softer market conditions in the UK and a backdrop of lower visit numbers in small animal practices. Client demand for our most advanced referral care, however, remains strong. EBITDA grew 6.3%. The Laboratories division provides analyzers in practice, which supports testing in-house, for which we supply the reagents for the tests and diagnostic testing services. Revenue in this division increased 10.3%, benefiting from improved case volume and increased analyzers in practice.
EBITDA grew 17.8%. In our online retail business, revenue increased 8.5%, benefiting from improved visits and conversion rates following the launch of the new website in February 2025. Profitability in the first half was impacted by cost of living, compounded by price elasticity testing, resulting in the division only breaking even in the first half. Profit is expected to return in the second half of the year. In head office, we saw an increase in costs of GBP 1.2 million due to increased share option costs, with options having not vested in the past few years, continued investment in people, especially in Australia, and continued investment in IT. I'm pleased to say the momentum seen across the group in the first half has continued into H2, 2026, and we continue to trade in line with market expectations.
On Slide 12, we have a healthy balance sheet with GBP 350 million of debt facility and headroom within our leverage target ceiling. 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 has primarily been in Australia, but acquisition opportunities may open up in the UK post the CMA conclusion. We have funding in place to support this growth. The group continues to generate healthy cash flows, with operating cash conversion of 75%, which is in line with our capital markets ambition of 70%. Free cash flow of GBP 34.4 million benefited from increased EBITDA and operating cash conversion.
With robust cash generation and a strong balance sheet, we've been able to continue to invest in future growth through CapEx investment and further acquisitions. We also undertook a small share buyback to support the move to the Main Market, which concluded in January 2026. As a result of these investments, net bank borrowings increased GBP 28.8 million from June 2025 to GBP 160.2 million, and leverage increased to 1.41 times. Leverage is well below our 2 times target ceiling and provides firepower to continue with our ongoing expansion in Australia and the UK in due course. We have committed bank facilities to February 2028. We have also hedged GBP 100 million of debt, swapping variable SONIA to fixed, securing an interest rate, including current margin, of circa 5.5% through to February 2028.
We take a considered and disciplined approach to capital allocation, actively engaging with shareholders and reviewing the approach on a regular basis. Presently, it's considered that investments in capital expenditure and acquisitions to be appropriate uses of capital to deliver long-term accretive growth to shareholders. Investments are carefully appraised against a hurdle rate of greater than 10% IRR, and in most cases, deliver positive returns on capital employed over the longer term. Our investment unlocks opportunities. As well as continued investment opportunities in facilities, clinical equipment, and technology, there is a strong pipeline of acquisition opportunities in Australia and acquisition opportunities in the UK in due course. We look forward to enhancing the client experience further and delivering on our purpose to give the best possible care to as many animals as possible.
I will now pass to Paul, our Chief Veterinary Officer, to update you on our strategic progress.
Thanks, Robin. Our new brand reflects who we are and what the letters CVS stands for: Care, Value, and Service. In the half, we've launched our dual brand approach, initially to colleagues at our leadership conference in November, digitally to clients on our new consumer websites, and then through updated signage, which is being rolled out across our U.K. companion animal sites as we speak. Our colleagues have welcomed this fantastic opportunity to speak about our common purpose and identity. Our client-friendly branding encapsulates why pet owners trust us, CVS, how our colleagues support and guide pet owners to find the most appropriate and individualized care, and what we offer pets and their owners day in and day out. We are just a short walk away.
Our new signage is fresh and it's consistent, where practices retain their local name, but shows that they are part of the wider CVS Vets Group. I'm pleased that our vision of being the veterinary company people most want to work for is delivering high colleague satisfaction and reduced attrition. We've launched our new clear employer brand centered around clinical quality, learning, progression, and support. These four elements encapsulate what our colleagues tell us is great about working at CVS. We aim to provide the best possible care to animals. We have a market-leading learning, education, and development program with the platform Knowledge Hub, and have established career pathways in our teams, especially for nurses and receptionists. Finally, we support. A practitioner is never alone, whether that's through support from our practice teams, our market-leading Vet Oracle service, or wellbeing support. We listen, and we care. We also inspire.
To support exceptional employee experience, we've empowered accountable leaders, which drive and support our teams. Our colleague satisfaction had taken a knock in recent years. We're pleased with the progression of our employee Net Promoter Score to +10 at December, ahead of our FY 2026 target of +5. Attrition continues to be stable and even reduced marginally in the half. I would like to take this opportunity to thank all of our CVS colleagues for their outstanding commitment and dedication, for the care they provide to our clients and their animals. Our considered approach to capital allocation supports our disciplined investment program. In H1 2026, we invested GBP 17.5 million in capital expenditure and continue to be committed to invest in our UK practices. In the half, we spent GBP 6.5 million on practice relocations, refurbishments, and associated clinical equipment.
We have a consistent, welcoming look and feel, which provides attractive spaces for both clients and colleagues. This investment has contributed to the improvement in both our client and employee engagement, as measured through the group's respective Net Promoter Scores. A practice-wide refurbishment or, where required, full relocation can benefit the clinical offering, practice teams, and clients over the long term. We typically seek larger footprints, providing additional space to address the client demand for our services, improve clinical activity, for example, through imaging equipment, dental or endoscopy, and these new facilities provide a positive environment for our clinical teams to work in, which not only can improve their well-being, but also attract further clinicians and provide secure business continuity over the long term. For now, the focus on capital expenditure remains in the U.K., but there will be opportunities to invest in Australia sites as we grow.
Over my career as a vet, the progress of veterinary care is second to none. What we can offer today is vastly improved from that of 2010 or even 5 years ago. What clients expect from us has changed, too. The research underpins evidence-based veterinary medicine. CVS is committed to turning evidence into improved patient care. Each year, our colleagues contribute to over 100 peer-reviewed publications and present more than 30 research abstracts at leading conferences, sharing insights that shape the future of veterinary practice. We also fund external research collaborations, with a recently funded research collaboration making the national news by providing a comprehensive human and feline comparative oncogenomics analysis that gives insight into feline cancer, also potentially human cancers, too. CVS is shaping the future of veterinary nursing through a pioneering nurse optimization PhD, launched in partnership with the Royal Veterinary College.
This three-year project will explore how evidence-based frameworks can enhance job satisfaction, patient care, and workforce sustainability, and helping define the role of veterinary nurses for years to come. In 2025, antimicrobial stewardship, AMS, remains a key research priority. Antimicrobial resistance is one of the most urgent global health challenges, CVS is leading efforts to promote responsible prescribing and robust infection control. Our CVS-funded PhD project with the University of Liverpool is focused on reducing the use of highest priority, critically important antibiotics, or HPCIAs, and promoting diagnostic-led prescribing. Alongside this, a 12-month collaboration with the University of Bristol across more than 50 CVS practices is already showing promising results, reducing antibiotic use and encouraging behavior change through CPD training and case-based learning. Now, these are just a small number of examples of the wide-reaching research that we support.
By embedding research into everyday practice and partnering with leading institutions, CVS is driving continuous improvement and fostering a culture of learning across our group. Our research agenda is focused on practical solutions that benefit patients, clients, and the profession. I'll now pass over to Richard for some closing remarks.
Thank you, Paul. We have taken a number of positive steps in the period, which position CVS to deliver further enhanced value for all our stakeholders. As you've seen through this presentation, our new CVS Vets companion animal consumer brand is now live, with circa 60 practices already rebranded. Our strategy for growth is clear: to provide great client service and care to as many animals as possible. Our clients appreciate this care and the value and service we provide, as reflected by the further increase in our client Net Promoter Score. We maintain a disciplined investment approach and have a healthy balance sheet. Strong operating cash flows support our ability to make further investment in growth. Our step up to the Main Market is complete, and we look forward to index inclusion in March.
We remain on course to deliver against market consensus for the full year, and notwithstanding short-term headwinds in the UK, we remain confident in delivering further growth. These interim results and the improvements we've made in the financial year to date reflect the continued dedication and professionalism of all our colleagues. I would like to take this opportunity to thank them all for their support, and I look forward to sharing further success in the future.