TIDMPETS
RNS Number : 8442Q
Pets At Home Group Plc
08 June 2018
FOR IMMEDIATE RELEASE, 8 JUNE 2018
Pets at Home Group Plc: Posting of Annual Report & Accounts
and Notice of AGM
Pets at Home Group Plc (LSE: PETS) (the "Company") today
announces that its Annual Report and Accounts for the year ended 29
March 2018 ("Annual Report"), Notice ("Notice") of the 2018 Annual
General Meeting ("AGM") and Form of Proxy for the 2018 AGM have
been sent to shareholders and the Annual Report and Notice are
available on the Company's website at
https://investors.petsathome.com .
In compliance with LR9.6.1, the Company has today submitted
electronic copies of the following documents to the National
Storage Mechanism appointed by the Financial Conduct Authority and
these will shortly be available for inspection at
http://www.morningstar.co.uk/uk/NSM :
-- Annual Report and Accounts for the year ended 29 March 2018
-- Notice of the 2018 AGM
-- Form of Proxy for the 2018 AGM
The Company's AGM will be held at 11.00 am on 12 July 2018 at
the Hallmark Hotel, Stanley Road, Handforth, Wilmslow, Cheshire,
SK9 3LD.
The directors of the Company have determined that all of the
resolutions to be put to a vote at the AGM will be decided on a
poll.
The Company's preliminary results announcement on 22 May 2018
included, in addition to the preliminary financial results for the
year ended 29 March 2018, information on important events that
occurred during the year and their impact on those financial
statements. That information, together with the information set out
in the Appendix below is provided in compliance with the
requirements of DTR6.3.5(2) (b). This information is not a
substitute for reading the full Annual Report and Accounts for the
year ended 29 March 2018.
S
Enquiries
Pets at Home Group Plc: +44 (0) 161 486 6688
Louise Stonier, Company Secretary
About Pets At Home
Pets at Home Group Plc is the UK's leading pet care business;
our commitment is to make sure pets and their owners get the very
best advice, products and care. Pet products are available online
or from our 448 superstores, many of which also have vet practices
and grooming salons. Pets at Home also operates a UK leading small
animal veterinary business, with 461 First Opinion practices
located both in our stores and in standalone locations, as well as
four Specialist Referral centres. For more information visit:
http://investors.petsathome.com/
Appendix
Directors Responsibility Statement
The responsibility statement below has been prepared in
connection with the Company's Annual Report and Accounts for the
year ended 29 March 2018.
The Directors of Pets At Home Group Plc confirm that to the best
of their knowledge:
-- the financial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view
of the assets, liabilities, financial position and profit or loss
of the Company and the undertakings included in the consolidation
taken as a whole; and
-- the strategic report/directors' report includes a fair review
of the development and performance of the business and the position
of the Company and the undertakings included in the consolidation
taken as a whole, together with a description of the principal
risks and uncertainties that they face.
The Directors of Pets at Home Group Plc consider the annual
report and accounts taken as a whole, is fair, balanced and
understandable and provides the necessary information for
shareholders to assess the Group's position and performance,
business model and strategy.
This responsibility statement was approved by the Board of
Directors on 21 May 2018 and signed on its behalf by Peter
Pritchard, Group Chief Executive Officer.
Principal Risks and Uncertainties
An effective risk management process has been adopted to help
the Group achieve its strategic objectives and enjoy long term
success.
The Board and the Executive Management Team are collectively
responsible for managing risk across the Group. Key risks are
allocated to an Executive Management Team member for oversight and
ultimate ownership. The full Executive Management Team supported by
key members of the Operating Board are responsible for closely
managing the most significant risks.
Internal Audit co-ordinates the risk management process and
holds meetings with all risk owners across the business three times
a year following which the individual risk registers are updated
including actions and progess made and an assessment of risk
ratings by evaluating each risk and assigning a score
The Health and Safety Committee assists the Board in managing
the risk of health and safety and security and holds quarerlty
meetings with stakeholders from across the Group. It recommends to
the Board and Group appropriate policies and procedures.
Audit and Risk Committee
Assists the Board fulfil its corporate governance and oversees
responsibilities in relation to financial reporting, internal
controls and the risk management framework.
Provides oversight and challenge to the assessment of principal
risks.
Reviews internal financial controls and the risk management
framework and assesses their effectiveness in mitigating Group
level risks and advises the Executive Management Team on risk
appetite.
Reviews and oversees the Group risk register - reviews detailed
risk reports at each sitting with supplementary reporting from the
management team on specific key risks.
Conducts regular deep dives into key risk areas with relevant
Directors to understand the nature of the risks and adequacy of the
mitigations and controls that are in place.
The key risks identified by the Board are summarised below.
Brand and reputation
Description and impact
The Group's number one value is Pets Before Profit, and pet
welfare is its highest priority. The Group also recognises the need
to protect its brand and reputation. Failure to do so could result
in loss of trust and confidence by both customers and
colleagues.
Mitigation
Pet welfare across the Group is overseen by the Pets Before
Profit Committee. This meets regularly to review pet welfare and
check that appropriate processes are in place to ensure we maintain
our high welfare standards.
As a retailer of small pets the highest possible welfare
standards must be maintained at all times. We have rigorous
processes in place to ensure this across all our stores, including
in-store adoption centres, and with our pet suppliers. All are
assessed regularly against a comprehensive set of welfare standards
by vets, third party assessors and an animal welfare organisation.
We also have a highly visible field operations team in respect of
in-store pets and grooming, where trained colleagues are focused on
maintaining the highest pet welfare standards.
Examples of where we prioritise pet welfare include our decision
to suspend the sale and adoption of rabbits over Easter and instead
provide workshops to educate about the responsibilities of pet
ownership. Also, at Christmas we encourage customers to buy the
relevant housing, accessories and food but to take gift vouchers
rather than pets. This allows new owners the chance to visit one of
our stores after Christmas to learn about the welfare needs of
their pet before taking it home.
We operate a confidential 'Pet Promise Line' where colleagues
are able to raise concerns about pet care directly with our Head of
Pets. Any calls to this line result in appropriate action to
address the concerns raised.
The Group also deals with customers' pets on a daily basis
through its veterinary practices. The veterinary practices have a
clear set of operational protocols, which are subject to the
professional standards mandated by the Royal College of Veterinary
Surgeons. To support the practices we have a clinical development
team who are all veterinary surgeons. They conduct clinical
excellence audits focusing on the quality of care to ensure a high
standard of clinical practice is maintained
Outlook
As we continue to increase our size and scale, we must work to
ensure that pet welfare standards continue to be maintained at a
high level across the Group. We will continue to monitor welfare
standards closely and take appropriate steps where required to
maintain them.
Change on prior year: unchanged
Strategic priorities: grow like for like, grow space and
optimise footprint, grow margins
Competition
Description and impact
The Group competes with a wide variety of retailers and vet
practices, including other pet specialists, supermarkets and
discounters. Online competition is also a risk, as large well-known
internet businesses expand into pet products and the established
pet product sites improve and expand their offer.
Failure to keep abreast of, and respond to, developments by our
competition in the areas of price, range, quality and service could
have an adverse impact on the Group's financial performance and
impact opportunities for growth.
Mitigation
In response to a change in shopping habits of our customers we
initiated targeted pricing changes at the start of 2017 beginning
with private label Advanced Nutrition foods. We have followed this
with price reductions in branded food lines and pet essentials.
Overall, we have seen good initial results, particularly in Food
and Advanced Nutrition, where increased sales volumes offset the
price reductions, leading to overall revenue growth in those
categories. Our plan remains to target price investment into
product areas that we believe drive shopper frequency and loyalty,
not simply reducing prices across the entire range.
Market research is carried out to review the pet market both at
home and abroad to understand what our competitors are doing
worldwide. This helps identify further changes or initiatives that
need to be implemented to help keep Pets at Home ahead of the
competition and remain a leader in the UK market.
We continue to evolve our proposition through the addition of
vets and groomers into our existing store estate whilst continuing
to innovate with the regular introduction of new and exclusive
products into our food and accessory ranges.
As a specialist retailer, the delivery of friendly expertise
through our highly engaged/trained store colleagues is a key
element of our proposition and we continue to invest to ensure our
service standards are continually improved. We have invested in two
major initiatives. Order-In-Store allows colleagues in every store
to advise and sell from our extended online range, while
Subscription services deliver flea treatments in convenient
individual pipettes to customers at the right time to administer a
single preventative dose to their pet dog or cat. In the medium
term we intend to extend our Subscription initiative in further
product areas.
As part of our investment in the digital shopping experience we
have redesigned our mobile checkout process to make it more
convenient and deliver a better experience for customers shopping
with Pets at Home while on the move. Further investment is planned
in our digital engagement with customers. The VIP (Very Important
Pet) club was launched in November 2012 and has been very
successful - attracting 3.9m active members at financial year-end.
This customer and pet database enables more targeted marketing,
which helps drive up basket values and enables us to build a
stronger sense of engagement with our customers and their pets.
Outlook
There has been some increase in the number of pure play online
competitors but this is not expected to have a significant impact
on our business. We have seen an expansion of the pet offer among
discounters.
Change on prior year: unchanged
Strategic priorities: grow like for like, grow retail and
services space, grow margins
Stores and services expansion
Description and impact
A key part of the Group's growth strategy is to increase the
growth in its in-store and standalone veterinary practices, Groom
Room salons and to increase the number of stores, whilst
maintaining our existing estate. If we are unable to deliver the
number of sites necessary to fulfil the services and stores
expansion laid out in our strategy our expected financial
performance could be adversely impacted.
Mitigation
The business maintains a pipeline of Joint Venture partner
opportunities to deliver its plans for new First Opinion vet
practices. We have a plan to expand our specialist vet division to
achieve national coverage of Specialist Referral Centres. We also
maintain a regular review of our store portfolio to maximize the
potential from our retail estate. This enables the Board to monitor
progress in delivering our growth strategy. Our store rollout is
mostly complete so our attention will be more focused upon how we
can ensure our full services offer is accommodated amongst the
existing estate. Our store estate is entirely leased which gives us
great flexibility. As leases come up for expiry or contain a break,
we will assess our portfolio on a case by case basis before
deciding whether to renew the lease, or to close or relocate a
unit. We have the ability, with smaller footprint stores, to
utilise mezzanine space to deploy vet and Groom Room services,
maximising the opportunity to offer a full range of service in our
retail stores. Any proposed new veterinary practice, grooming salon
or store investment has to deliver an appropriate financial return
after taking into account any financial impact on the existing
store portfolio.
Before we are able to open a new First Opinion veterinary
practice we need to recruit a Joint Venture partner with the
ability to both fund their investment into the Joint Venture and to
provide the personal guarantee to the bank providing the third
party financing to the Joint Venture practice. We continue to
investigate opportunities for new store formats, including the
trial of a convenience store within a Tesco superstore.
Outlook
Our strategy is to cautiously grow our estate in priority
locations and to optimise the existing store estate with services.
Store space vacancy levels are starting to increase with retailer
administrations and consolidation of existing retail space,
providing further opportunities for our future store rollout.
Change on prior year: unchanged
Strategic priorities: grow like for like, grow retail and
services space, grow margins
Our People
Description and impact
As a specialist retailer and services group, retaining highly
trained and engaged colleagues is fundamental to delivering
outstanding customer service, which is a key element of our
proposition and drives our continued success and the delivery of
our future growth. Our growth plans and future success are also at
risk if we do not recruit and retain high calibre, talented senior
management. A significant number of colleagues in certain areas of
our business are EU nationals. Brexit may result in changes to UK
immigration policy which increases the risk around the
availability, recruitment and retention of these individuals.
Mitigation
Our colleagues are the foundations on which we have built our
success. We recognise that their knowledge and passion are at the
heart of the relationships we build with our customers and their
pets. We continue to ensure that we are attracting diverse talent
by updating our recruitment process, including
our recruitment website, policies and procedures, with the aim
of being able to attract diverse candidates with the requisite
skillset. By driving continued investment in progressive training
and learning programmes across the business we ensure that we are
developing and retaining our talent.
Our Remuneration Policy, as set out on pages 85 to 94, is
designed to ensure executives of the necessary calibre are
attracted and retained and that through our Restricted Share Plan,
colleagues across the business can share in our success. Similarly,
we continually review the remuneration and benefits packages for
our colleagues to make sure they are appropriately rewarded for the
substantial contribution they make to our growth and success. We
continue to communicate these benefits and the value they bring to
colleagues to ensure they are taking advantage of them. We also
closely monitor colleague engagement and retention rates.
Listening to our colleagues is critical to our business so we
are launching a new listening survey, which will help to identify
issues, and further embed our culture and values, whilst providing
benchmarking data with other companies in our sector. Succession
plans are in place for key roles which are regularly reviewed by
the Board and senior management. We continue to review the impact
of Brexit and the possible change to UK immigration policy which
may impact the availability, recruitment and retention of
colleagues in both our Vet Group and distribution centres. We have
employed long term strategies to mitigate the expected impact,
including operating flexible recruitment and retention initiatives
across the Group, launching international experienced and graduate
recruitment programmes for veterinary surgeons, whilst reviewing
opportunities in non-EU vet recruitment markets. We are working
closely with
professional bodies including the Royal College of Veterinary
Surgeons and the British Veterinary Association and support them in
their calls on Government to formally recognise the shortages of
veterinary surgeons across all disciplines, particularly in light
of restrictions on free movement for EU nationals following
Brexit.
Outlook
The ongoing Brexit negotiations may impact our employment of EU
nationals. We need to ensure that the Group continues to be an
attractive place to work, particularly if employment levels
continue to increase nationally and there is more competition in
the job market
Change on prior year: unchanged
Strategic priorities: grow like for like, grow retail and
services space, and grow margins
Business Systems and Information Security
Description and impact
The need to maintain core business systems and mitigate against
security risk whilst supporting the Group's growth plans and
delivering cost efficiency remains paramount again this year. With
the arrival of GDPR, there comes a significant increase in the
level of scrutiny organisations are being placed under regarding
the management and use of personal data. With this comes additional
cost linked to the evaluation and remediation of associated risks
(data, people and infrastructure). Our ability to balance these
challenging demands is key to ensuring that the business is able to
maintain target growth levels and be secure from data security
breach and legal challenge.
Mitigation
To ensure the stability of our IT systems whilst supporting
sustained business growth, we are developing operational monitoring
capabilities to assess performance and capacity of the live
systems. This will enable a proactive stance to be taken regarding
the visibility and management of issues prior to their manifesting
at customer touch points. In addition we are working with our
suppliers where appropriate, looking at opportunities to move to
managed
services and cloud based solutions. A recent example of this
includes the migration of the Retail platform into a hosted
environment as part of a managed service, simplifying our hosting
and support arrangements. This also aligns with our Disaster
Recovery strategy to exit our Stoke backup site by 2020, moving
disaster recovery (DR) capability into the cloud, and further
increasing the already distributed nature of our architecture. We
have conducted network and web infrastructure DR tests, with Retail
platform testing to follow once the move to the hosted environment
is complete.
The Information Security programme has already delivered Group
wide training and awareness campaigns, educating colleagues to the
risks associated with data and physical security. In addition, IT
Security policies have been revised for re-issue to the wider
Group. A significant programme of work remains ongoing to deliver a
range of security enhancements, to include secure email and device
encryption, revised IT standards and procedures, enhanced asset
management, user authentication and vulnerability scanning amongst
others. GDPR drives the requirement to ensure that personal data is
protected at all times, and this has formed the key principle in
the design of our data centric strategy bringing customer and other
data together across the Group. The selection of a cloud based
platform enables us to anonymise certain data to allow full
analysis whilst reducing the risk of customer data being exposed.
The solution also allows us to link customer information more
easily, enabling full trace back to core operational systems that
the customer has been identified in so that we can better update
information and remove/archive where appropriate.
Outlook
Systems stability continues to improve with the move to cloud
based solutions and managed service provision. Greater focus on
operational stability and performance over the coming year will
enable a more proactive stance in the mitigation of performance,
capacity and stability issues with the creation of teams focused on
these aspects. Disaster Recovery testing will be conducted at the
point of change, ensuring ongoing coverage. Big data will enable
greater insight into customer behaviour and retail opportunity in
an environment which ensures GDPR compliance.
Change on prior year: unchanged
Strategic priorities: grow like for like and grown margins
Supply Chain/Sourcing
Description and impact
During the financial year, approximately US$65m of the Group's
merchandise cost of goods was globally sourced, and therefore we
are exposed to the risks associated with international trade, such
as inflation, changing regulatory frameworks and currency exposure.
We have two national distribution centres covering the north and
south of the UK respectively. A disaster at one of these may result
in a significant interruption to the supply of stock for a large
number of stores and in the fulfilment of internet orders.
The impact of Brexit on our overseas supply chain remains
unknown but may be significant, particularly in view of probable
changes to the UK's trading terms with the rest of the world. We
are also exposed to the risks associated with the quality and
safety of products produced globally on behalf of the Group, many
of which are own branded or exclusive private labels. A failure to
manage this risk adequately could lead to reputational damage,
reflected in a lack of confidence by customers and colleagues in
the Group brands.
Mitigation
Having Pets at Home colleagues on the ground in the Far East
working collaboratively with suppliers enables us to monitor
closely compliance with the Group's Code of Ethics and Business
Conduct policy, and our Supplier Quality Manual. In addition, an
independent third party undertakes unannounced visits to further
monitor compliance with Group policies.
We have made significant investments in both our sourcing
strategy and our quality and food technical function, in terms of
people, processes, testing and reporting, to ensure we have the
capability to meet the future ambitions of the business. Business
continuity plans are in place for the distribution centres which
have been tested. They help us mitigate the impact of a disaster by
enabling us to service all stores and orders for a priority range
of SKUs from a single distribution centre whilst we source a second
facility and recover full product supply. We will continue to
monitor Brexit developments closely and respond to any impact on
our supply chain proportionately. Exposure to foreign currency
movements is mitigated through our hedging strategy; see the
Treasury and financial risk.
Outlook
We continue to develop our quality assurance processes and to
ensure the effectiveness of our Far East sourcing office in
mitigating our sourcing risks in the region.
Change on prior year: unchanged
Strategic priorities: grow like for like, grow margins
Liquidity and Credit Risk
Description and impact
The business requires adequate cash resources to enable it to
fund its growth plans through its capital projects and/or an
expansion of the Group's working capital requirement.
Without adequate cash resources, the Group may be unable to
deliver its growth plans, with a consequent impact on future
financial performance.
Mitigation
The Group's finances are continually monitored in the context of
its growth plans. The Group's current financing facilities are in
place until April 2020, As a result, the Group is confident that it
has adequate revolving facilities in place, with a broad syndicate
of ten banks. The Group's growth plans in respect of Joint Venture
veterinary practices is predicated on the availability of finance
for new Joint Venture veterinary partners to fund both the capital
cost and working capital requirement for each new practice opening.
The Group also provides additional financial support to First
Opinion practices to support their working capital requirements and
growth in clinical capacity. This investment is a particular
feature of the Joint Venture operating model and in making this
investment the Group considers its total returns across all
practices on a portfolio basis. We have established a provision to
reflect the assessment of extended investments being repaid over
different lengths of time, with different risks of return, to
provide for any potential shortfall.
The Group has facilities in place with major high street lenders
that give us confidence that our medium term growth plans are
financed adequately. The Group ensures that all cash surpluses are
invested with banks that have credit ratings and investment
criteria that meet the requirements set out in the Group Treasury
policy, which has been approved by the Board. The Group's key
suppliers are exposed to credit risk and as part of the Group's
overall risk management programme, the business has identified
alternative suppliers where appropriate and developed contingency
plans in respect of own label and private label food products.
Outlook
We will continue to monitor our finances and build relationships
with our finance providers. We do not anticipate any significant
macroeconomic changes in the short to medium term that may affect
this risk area although the outcome of the EU referendum may have
some bearing.
Change on prior year: unchanged
Strategic priorities: grow retail and services space
Treasury and Financial Risk
Description and impact
The Group has an exposure to exchange rate risk in respect of
the US dollar that is the principal purchase currency for goods
sourced from the Far East. The political and macro-economic
environment has increased currency pressures and we may see this
continue for some time. The Group also faces risks from changes to
interest rates and compliance with taxation legislation. If we do
not adequately manage this exposure there could be an impact on
the
Group's financial performance with a consequential impact on
operational and growth plans
Mitigation
This exposure to FX fluctuation is managed via forward foreign
currency contracts that are designated as cash flow hedges. The
Group has borrowings with floating interest rates linked to LIBOR,
thereby exposing the Group to fluctuations in LIBOR and the
consequent impact on interest cost. To manage this risk the Group
has interest rate swaps in place that fix the interest rate on a
significant proportion of the Group borrowings.
All hedging activity is undertaken by the Group Treasury
function in accordance with the Group Treasury policy that sets out
the criteria for counterparties with whom the Group can transact
and clearly states that all hedging activities are undertaken in
the context of known and forecast cashflows, with speculative
transactions specifically prohibited. Dedicated tax resource is in
place and specialist tax advisors are retained to assist in this
area.
Outlook
Ongoing currency movements between the US dollar and GBP may
result in further exchange risk, particularly in light of the
ongoing Brexit process. We will continue to monitor this and adjust
our approach to hedging where necessary
Change on prior year: unchanged
Strategic priorities: grow margins
Regulatory and Compliance
Description and impact
Many of the Group's activities are regulated by legislation and
standards including, but not limited to, trading, advertising,
product quality, health and safety, pet shop licensing, national
minimum wage, national living wage, modern slavery, bribery, data
protection, carbon emission and gender pay gap information
reporting, Failure to comply with these obligations may result in
financial or reputational damage.
Mitigation
We actively monitor both regulatory developments in the UK and
Europe and compliance with our existing obligations where we have
internal policies and
standards to ensure compliance where appropriate. We also
provide training for colleagues where required and operate a
confidential hotline for colleagues to raise concerns in
confidence. Our suppliers commit to and are audited against
adhering to relevant regulations, such as Modern Slavery Act 2015,
the Bribery Act 2010, the Data Protection Act 1998, and from 25 May
2018, the General Data Protection Regulation (GDPR), along with our
mandatory standards as outlined in our Quality Manual. In response
to GDPR we have a steering committee with executive sponsorship
which is supported by defined working groups to ensure our GDPR
compliance plan is actioned. The Animal Welfare (Licensing of
Activities Involving Animals (England) Regulations 2018 were laid
before Parliament in Feb 2018 and come into force in Oct 2018. This
updated legislation follows an extensive consultation which began
in December 2015. We supported the changes proposed to improve pet
welfare and engaged proactively in the consultation and with
ministers and officials directly. Having demonstrated our expertise
and commitment to high welfare standards, we were able to play a
leading role in the development of the detailed guidelines that
underpin the new regulations and form the basis of future licensing
inspections by local authorities.
Outlook
We welcome the Government's recent proposals around animal
establishments licensing which comes into force in October 2018. We
continue to monitor these and other regulatory developments across
the UK and Europe and will plan accordingly
Change on prior year: unchanged
Strategic priorities: grow like for like and grown margins
Extreme Weather
Description and impact
Prolonged extreme or unseasonal weather conditions may reduce
footfall in our stores, resulting in weak sales, leading to adverse
impacts on profit and inventory.
Mitigation
We actively monitor and forecast demand and, should this risk
occur, we would review planned and tactical promotional activity to
determine whether strengthening this would drive sales.
Outlook
Further improvements to our Omnichannel offering will continue
to improve our resilience to reduced store footfall during periods
of extreme weather.
Change on prior year: unchanged
Strategic priorities: grow like for like
Related Party Transactions
Veterinary practice transactions
The Group has entered into a number of arrangements with third
parties in respect of veterinary practices. These veterinary
practices are deemed to be related parties due to the factors
explained in note 1.4 of the financial statements.
Commitments relating to these veterinary practices are included
within notes 25 to 27 of the financial statements.
The transactions entered into during the period, and the
balances outstanding at the end of the period are contained in note
27 to the financial statements.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
NOAEASKPEAXPEFF
(END) Dow Jones Newswires
June 08, 2018 11:29 ET (15:29 GMT)
Pets At Home (LSE:PETS)
Historical Stock Chart
From Jun 2024 to Jul 2024
Pets At Home (LSE:PETS)
Historical Stock Chart
From Jul 2023 to Jul 2024