Vets Have Highest Capital Returns In UK

A study by by UK accounting information company CCH has found that out of all sectors of UK business, in the last 2 years veterinary practices generated the highest return on capital employed, (ROCE). At an impressive 37% ROCE, vets came way above the normally expected return of 10-12%. Last year Tesco achieved a ROCE of 12.9%.

ROCE

ROCE measures the efficiency and profitability of a company's capital investments. The new CCH league table draws on figures from the company's Strategic Planning software, which analyses the financial performance of over 530 individual industry sectors.

One reason why veterinary practices came top is likely to be the increasing popularity of relatively inexpensive pet insurance policies helping to fund more complex and costly procedures, such as heart surgery, chemotherapy, and even alternative remedies, making them increasingly profitable says the CCH report.

The UK pet insurance market is growing strongly: according to research by Datamonitor, the market was worth £380m in 2006, and is forecast to reach almost £600m by 2011.

Chris Lowry, a partner at the national accountancy group UHY Hacker Young, commented:

"With veterinary science having one of the longest training periods of any professional qualification, the very high barriers to entry mean that vets can ensure they are well rewarded for their work.

"Although veterinary businesses carrying out the more costly procedures clearly have to invest in any specialist equipment or extra training required, they appear to be getting the necessary economies of scale to make the return on that expenditure very worthwhile."

He added:

"Whilst many entrepreneurs who have set up specialist businesses are capable of generating high returns from their investments, the real test is how they exploit the company's full potential to convert these returns into a successful expansion strategy and become regional or national players."

CCH Top 15 League Table of UK Industry Sectors by Return On Capital Employed (ROCE) %

Position	Industry Sector	Average ROCE%
1	Veterinary activities	37
2	Plastering	28.3
3	Retail of fruit and vegetables	27.5
4	Retail of meat and meat products	20.3
5	Joinery installations	20.3
6	Auxiliary financial intermediation (IFAs, mortgage brokers, currency exchange brokers)	19.6
7	Dispensinmg chemists	19.6
8	Erection of roof covering & frames	18.8
9	Other specialised retail food	18.6
10	Insulation work activities	18.6
11	Floor and wall covering	18.3
12	Plumbing	17.5
13	Legal activities	17
14	Other special trades construction	16.9
15	Hairdressing & other beauty treatment	16.7