TIDMPVG
RNS Number : 5037R
Premier Veterinary Group PLC
22 September 2017
PREMIER VETERINARY GROUP PLC
("PVG", the "Company" or the "Group")
Trading update
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014
London, UK, 22 September 2017 - Premier Veterinary Group plc
(LSE: PVG) provides the following update on trading. All references
in this statement refer to the continuing operations of the
business, which excludes the Buying Group business which was sold
on 30 April 2017.
Group turnover for the year ending 30 September 2017 is expected
to exceed GBP2.5m representing growth of 35% on the previous year.
EBITDA for the year is expected to be in line with market
expectations.
The Group's recurring revenue streams are driven by the number
of pets that are signed up to Premier Pet Care Plan ("PPCP"), a
preventative healthcare programme for pets. The number of revenue
generating pets on active plans for the third quarter of its 2017
financial year, and in the preceding four quarters was as
follows:
000's As at As at As at As at As at
Jun-16 Sept-16 Dec-16 Mar-17 Jun-17
United Kingdom 115 121 132 137 145
Europe 14 18 21 22 25
US - - 1 2 3
------- -------- ------- ------- -------
Total no. of fee generating
pets on plan 129 139 154 161 173
The number of revenue generating pets on plan is expected to
exceed 185,000 at the end of the financial year representing growth
in excess of 33%.
Outlook
The UK and Europe continue to perform in line with the Board's
expectations.
The US remains a key focus for the business representing our
largest growth opportunity.
As reported on 30 April 2017, a number of differences between
the UK and US markets has necessitated a different approach to
certain elements of the provision of preventative healthcare plans
in the US. The key difference relates to the sensitivity to working
capital in US veterinary hospitals. This sensitivity had resulted
in both the rate of clinic sign up reducing and a reduction in the
rate of pet sign ups after the initial launch. A number of
initiatives were implemented to address these issues.
These initial changes resulted in increased activity in clinics
signing up to PPCP and the level of clinic sign ups in June through
to August 2017 has been the highest that has been achieved since
starting operations in the US. However, the initiatives that have
been implemented are taking longer than originally expected to
reverse the slow down in pet sign up rates after the initial launch
and further enhancements are now being implemented, which requires
additional investment.
As a result of the above, it is estimated that a further period
of twelve months may be required to achieve the volumes previously
envisaged in the US and accordingly the Board expect the Group's
sales and profits for the next financial year to be materially
below the Board's previous expectations.
Overview of PPCP developments in each region
US
The prospects for the US remain encouraging and positive
progress has been made in the following areas:
-- Fee generating pets on plan by the financial year end are
expected to be approximately 4,000.
-- Contracts have been signed with 189 clinics to implement
PPCP. 90 clinics have been launched with the remainder in the
launch pipeline.
-- A further cooperation agreement has been signed with
Purchases Services Holdings LLC ("PSI") whereby PSI will promote
PPCP and provide leads to develop our sales pipeline. PSI is a
group purchasing organisation with over 4,000 active members.
-- A number of discussions are taking place with other
distributors and group purchasing organisations and further updates
will be provided in due course.
-- The operational infrastructure has been expanded rapidly to
address the demand and geographical reach of opportunities in the
US.
-- The business is operating in 22 states and currently has a team of 16 people.
Given the strong pipeline of sales, the Board of PVG remains
confident that the opportunity to access a significant segment of
the available US market still exists. The total number of dogs and
cats across the US is estimated at 70 million and 74 million
respectively (U.S. Pet Ownership & Demographics Sourcebook
2012).
United Kingdom
In the United Kingdom, the number of pets on PPCP at the end of
the year are expected to exceed 155,000, representing growth of
approximately 28% on last year. Revenues are expected to be
approximately GBP1.85m, achieving growth in excess of 15%.
The Group's UK PPCP business continues to see opportunities for
growth both from its existing client base and new customer
opportunities.
Europe
In Europe, the number of pets on PPCP for the year are expected
to exceed 26,000, representing growth of approximately 50% on last
year. Revenues are expected to be approximately GBP0.45m, achieving
growth in excess of 70%.
The most significant operation in Europe, branded as Huisdieren
Zorg Plan ("HZP"), is in the Netherlands, with 187 contracted
clinics. The territory is expected to have approximately 23,000
pets on plan at the end of September 2017, representing a 38%
increase for the year.
On 20 September 2017, the group acquired the customer base of a
small competitor in the Netherlands. This provides an opportunity
for HZP to migrate and relaunch these customers on to the Group's
platform. As a result of the organic growth and acquisition, HZP
will have approximately 20% market share in the Netherlands, is
close to profitability and will become cash generative in the near
future.
The French operation, branded as "Premier VetoPlan" ("PVP")
commenced in the early part of this financial year since when 49
clinics have contracted to launch PVP and 25 of these have been
launched at this stage. Pets on plan are expected to exceed 1,000
by the financial year end. Our progress in this territory is now
being supported by a major pharmaceutical company.
Financing
The Group is expected to have cash at the end of September 2017
of approximately GBP3 million. In order to finance the continued
investment in the US, the Group is expected to require additional
funding from Quarter 3 of the financial year ending September 2018.
This, in part, will be funded from a reduction in the estimated tax
charge on the disposal of the Buying Group following clarification
of the treatment of brought forward tax losses. The directors are
confident of being able to raise the additional finance required
and are considering a number of options.
Dominic Tonner, Chief Executive Officer of PVG, commented:
"While it is disappointing that the challenges in the US are
taking longer to overcome, PVG has developed a significant presence
in this territory entirely through organic growth including
entering into cooperation agreements with major industry players,
working across 22 states and contracting with 189 veterinary
clinics and it remains a significant opportunity for the Group. It
is pleasing that the UK and Europe have performed in line with our
expectations and the Netherlands is expected to become cash
generative in the near future."
For further information, please contact:
Premier Veterinary Group plc Tel: +44 (0)117 970 4130
Dominic Tonner, Chief Executive Officer
Will Evans, Chief Financial Officer
Note to Editors:
PVG's services to third party veterinary practices, through its
wholly-owned subsidiary, Premier Vet Alliance Limited ("PVA"),
include the administration and support of a preventative healthcare
programme for pets branded "Premier Pet Care Plan" ("PPCP"). In the
US, where veterinary practices are known as veterinary hospitals,
PPCP is marketed through the Company's wholly-owned subsidiary,
Premier Vet Alliance (US) Limited.
PPCP is a structured, preventative healthcare programme for
cats, dogs and rabbits and is available only through veterinary
practices/hospitals. The programme is seen as a way of providing
gold standard care for pets at an affordable price for the client,
by way of fixed monthly payments.
PPCP uses a clinical approach to prevention, as this is the most
effective method of ensuring illnesses are diagnosed more
quickly and not given a chance to advance. What truly sets PPCP
apart is its unique approach of offering an end-to-end solution and
support to the practice/hospital, which has been proven to work
extremely well. PVA works alongside practices/hospitals to create a
tailor-made, cost-effective service for clients, one that delivers
excellent care to their patients and significantly improves
practice/hospital performance.
For further details:
http://www.premiervetgroup.co.uk/
This announcement includes "forward-looking statements" which
include all statements other than statements of historical facts,
including, without limitation, those regarding the Company's
financial position, business strategy, plans and objectives of
management for future operations, and any statements preceded by,
followed by or that include forward-looking terminology such as the
words "targets", "believes", "estimates", "expects", "aims",
"intends", "will", "can", "may", "anticipates", "would", "should",
"could" or similar expressions or the negative thereof. Such
forward-looking statements involve known and unknown risks,
uncertainties and other important factors beyond the Company's
control that could cause the actual results, performance or
achievements of the Company to be materially different from future
results, performance or achievements expressed or implied by such
forward-looking statements. Such forward-looking statements are
based on numerous assumptions regarding the Company's present and
future business strategies and the environment in which the Company
will operate in the future. These forward-looking statements speak
only as at the date of this announcement. The Company expressly
disclaims any obligation or undertaking to disseminate any updates
or revisions to any forward- looking statements contained in this
announcement to reflect any change in the Company's expectations
with regard thereto or any change in events, conditions or
circumstances on which any such statements are based. As a result
of these factors readers are cautioned not to rely on any
forward-looking statement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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