TIDMPVG
RNS Number : 4816R
Premier Veterinary Group PLC
15 June 2018
PREMIER VETERINARY GROUP PLC
("PVG", the "Company")
INTERIM RESULTS FOR THE SIX MONTHSED 31 MARCH 2018
London, UK, 15 June 2018 - Premier Veterinary Group plc ("PVG"
or the "Company") today announces its unaudited interim results for
the six months ended 31 March 2018.
HIGHLIGHTS
-- 32% increase in total number of pets on fee-generating pet
care plans under PVG's preventative healthcare programme for pets
branded "Premier Pet Care Plan" ("PPCP") to 212,000 (31 March 2017:
161,000).
-- Revenues increasing in all territories
Six months ended 31 March 2018 2017 Change
UK GBP1,042k GBP887k +17%
----------- ----------- -------
Europe GBP352k GBP221k +59%
----------- ----------- -------
US GBP146k GBP49K +198%
----------- ----------- -------
Total revenue GBP1,540k GBP1,157k +33%
----------- ----------- -------
-- Loss after tax from continuing operations to 31 March 2018
GBP1.94m (31 March 2017: GBP2.07m).
-- Cash and short term deposits of GBP1.10m as at 31 March 2018 (at 31 March 2017: GBP0.71m).
-- Cash outflow from continuing operations for six months to 31
March 2018 of GBP1.98m (6 months ended 31 March 2017:
GBP2.09m).
Post period events
-- Additional GBP750,000 of unsecured loan notes made available
by Bybrook Finance Solutions Limited increasing total committed
facility to GBP2.25million. First GBP0.5m tranche of facility drawn
on 1 June 2018 as planned.
Dominic Tonner, CEO of PVG commented:
"PVG has continued to make significant investments across all
its geographical territories to ensure that it remains at the
forefront in working with veterinary practices to deliver
preventative healthcare programmes for pets. Solid progress has
been made in number of pets on plan across the UK and Europe during
the first six months of the financial year and this progress has
continued in April and May. Whilst the improvements in growth in
the US are encouraging, the current number of pets on plan is not
at levels previously expected. We are continuing to explore options
that will enable the Group to capitalise on the investment that has
already been made in the US whilst at the same time reducing the
continuing cash burn in this territory."
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014.
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
INTERIM MANAGEMENT REPORT
To the members of Premier Veterinary Group plc
Cautionary statement
This Interim Management Report ("IMR") has been prepared solely
to provide additional information to shareholders to assess the
Group's strategies and the potential for those strategies to
succeed. The IMR should not be relied on by any other party or for
any other purpose.
The IMR contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the
information available to them up to the time of their approval of
this report, but such statements should be treated with caution due
to the inherent uncertainties, including both economic and business
risk factors, underlying such forward-looking information.
This interim management report has been prepared for the Group
as a whole and, therefore, gives greater emphasis to those matters
which are significant to Premier Veterinary Group plc and its
subsidiary undertakings when viewed as a whole.
Introduction
Premier Veterinary Group plc provides its services to third
party veterinary practices through its wholly-owned subsidiary,
Premier Vet Alliance Limited ("PVA"). The Company also operates a
number of wholly-owned overseas subsidiaries to market its services
in the respective country.
The principal activity of the Group is the administration and
support of a preventative healthcare programme for pets branded
"Premier Pet Care Plan" ("PPCP"). PPCP is a structured, monthly
payment preventative healthcare programme for cats, dogs and
rabbits covering many of the fixed cost non-insurable items to help
maintain the health and wellbeing of a pet and is available only
through veterinary practices. The programme facilitates gold
standard care for pets at an affordable price for the pet owner, by
way of fixed monthly payments.
In the comparative six month period ended 31 March 2017, PVA
operated a buying group "Premier Buying Group" (the "PBG") in the
UK and Ireland, which offered enhanced discounts to member
practices on pharmaceutical and consumable spending. The PBG was
sold on 30 April 2017, and the results of the PBG are treated as
discontinued in the comparative period of this IMR.
In these results, references to "continuing" operations are in
relation to the PPCP business.
Overview and strategic update
As stated in the Annual Report and Accounts for the year ended
30 September 2017 (the "2017 Annual Report"), the Group's
objectives are to:
-- leverage the success of the PVA business;
-- develop the business through its global strategic partnerships and growing data set;
-- continued investment in PVA's global transaction platform; and,
-- develop new opportunities for growth.
In the first half of the financial year, the Group has continued
to pursue its strategy of targeted geographical expansion in order
to maximise the Group's growth potential. Over the last 6 months,
the Group has grown its PPCP businesses in all regions and the
management team continues to explore opportunities to accelerate
growth. The number of clinics and hospitals contracted to sell
preventative health programmes continues to increase.
Regional review
UK
In the UK, the number of pets on plan has increased by 25% to
171,000 as at 31 March 2018 (31 March 2017: 137,000). The pipeline
of opportunities to sign new clinics on to PPCP remains strong and
the ongoing rate of growth in this well-established market is
encouraging. The anticipated increase in revenues from veterinary
clinics relating to the continued growth in pets on plan may be
partly offset from an expected reduction in revenues from other
third parties.
Resources have been added to our UK training team, as well as to
the IT department to ensure the business delivers enhanced levels
of customer support and experience.
Europe
The number of pets on plan in Europe has increased by 59% to
35,000 (31 March 2017: 22,000).
The Group's most significant territory in Europe is the
Netherlands which remains on course to become profitable in the
financial year ending 30 September 2018. The number of pets on plan
has grown by 45% to 29,000 as at 31 March 2018 (31 March 2017:
20,000). As a result of organic growth and the small acquisition in
September 2017, PVG will have approximately 20% market share of
small animal clinics in the Netherlands. The Group is implementing
different service offerings to widen the appeal of PPCP to other
segments of the Dutch veterinarian market.
In France, at 31 March 2018, there were 4,000 pets on plan (31
March 2017: Nil). 108 clinics have contracted to launch and 60 of
these have been launched at this stage. There is a strong pipeline
of further opportunities.
US
Early in this financial year, the Group took the decision to
focus its US resources in the mid-west and south-eastern states, in
order to maximise growth in revenues from its available cash
resources.
The number of pets on plan has increased to 6,000 (31 March
2017: 2,000). The growth in pets on plan is not at the levels that
have been experienced in other territories which has been caused by
differences in the US markets which have previously been
reported.
The net growth in pets on plan, being new pets signed up less
pets cancelled, is starting to improve following the most recent
technological enhancements implemented in January 2018, which have
halved the number of plans being cancelled where the pet owner
payment collection has failed. This enhancement has been well
received and there are signs that over the last three months,
compared to the previous three months, the sign up rate is
improving. Whilst the improvements in growth are encouraging the
current number of pets on plan is not at levels previously
expected.
We are continuing to explore options that will enable the Group
to capitalise on the investment that has already been made in the
US whilst at the same time reducing the continuing cash burn in
this territory.
Financial and non-financial key performance indicators
("KPIs")
As set out in the 2017 Annual Report, the Group monitors its
performance in implementing the Group's strategy with reference to
four KPIs. The KPIs are applied on a Group-wide basis. Performance
against those KPIs in the six months ended 31 March 2018 for the
continuing business, excluding Premier Buying Group, was as
follows:
Sales volume and revenue growth
A key element underpinning the Group's strategy is to deliver
sales volume growth and revenue growth from PPCP. Sales volume
growth is measured by the number of direct debits processed under
PPCP.
PPCP fees are generated from the collection and management of
direct debits on behalf of veterinary practices external to the
Group and are recognised on a receipts basis. A flat fee is
received for every direct debit collected.
PVA's revenues for the continuing business for the six months
ended 31 March 2018 increased by 33% to GBP1.54m (31 March 2017:
GBP1.16m). These revenues arise entirely from the PPCP business in
the UK, Europe and the US.
The total number of direct debits processed increased to
1,226,000 in the six month period to 31 March 2018 (31 March 2017:
937,000), an increase of 31%.
Number of member clinics
Management recognises the value of its relationships with
clinics and monitors the number of member clinics as a KPI. This is
tracked and reviewed in each territory on a monthly basis.
Management has concluded that shareholder value will be derived
from this KPI and recognises the need to achieve growth in this KPI
within a cost-base suited to the business. An individual customer
(or practice) may operate a number of clinics.
At 31 March 2018, the number of PPCP member clinics in each
region was:
Total as at Total as at
31 March 2018 31 March 2017 % growth
UK (including Northern Ireland) 644 534 21%
--------------- --------------- ---------
* Netherlands 234 159 47%
--------------- --------------- ---------
* France 108 36 200%
--------------- --------------- ---------
* Other European countries 71 66 0%
--------------- --------------- ---------
Europe 413 267 54%
--------------- --------------- ---------
US 241 90 167%
--------------- --------------- ---------
Total 1,298 885 47%
--------------- --------------- ---------
Pets on Plan
Whilst clinic relationships indicate the future growth potential
for the Group, it is also important to monitor the number of pets
on plan as this is the key revenue driver. This KPI enables
management to ensure member clinics are achieving the levels of
penetration that are expected and to focus attention on clinics
that are underperforming.
The number of fee generating pets on plan represents those pets
on plan where a fee has been generated for the Group in that month,
i.e. a direct debit (or equivalent) has been processed for that
pet. Due to the time required by banking protocols to set up these
transactions, there will be joiners and leavers in a month who are
not included in this measure as they have not yet been processed by
(or removed from) the system.
The following table shows the quarterly growth in the number of
pets on plan over the last 12 months.
000's As at As at As at As at As at
Mar-17 Jun-17 Sept-17 Dec-17 Mar-18
United Kingdom 137 145 156 164 171
------- ------- -------- ------- -------
Europe 22 25 28 32 35
------- ------- -------- ------- -------
US 2 3 4 5 6
------- ------- -------- ------- -------
Total no of fee generating
pets on plan 161 173 188 201 212
------- ------- -------- ------- -------
Overall, the number of pets administered by PPCP has increased
by 32% to 212,000 as at 31 March 2018 (31 March 2017: 161,000). In
the UK, the number of pets on plan has increased by 25% to 171,000
as at 31 March 2018 (31 March 2017: 137,000). The number of pets on
plan in Europe has increased by 59% to 35,000 (31 March 2017:
22,000).
In the US the number of pets on plan has increased by 200% to
6,000 (31 March 2017: 2,000).
Cash processed through the platform
Member clinic numbers and pets on plan are internal points of
reference for the Group. By monitoring cash (inclusive of sales
tax) processed through the platform management is able to monitor
the benefit to partners of the Group's member clinics operating
PPCPs. The table below shows the value of transactions processed in
the six months to 31 March 2018 compared to the same period last
year.
Value of transactions processed 31 March 31 March
in 6 months ended 2018 2017 % growth
GBP000s GBP000s
--------- --------- ---------
UK 14,512 11,416 27%
--------- --------- ---------
Europe 2,844 1,890 50%
--------- --------- ---------
US 829 182 355%
--------- --------- ---------
Total 18,185 13,488 35%
--------- --------- ---------
Results for the six months ended 31 March 2018
The Group's total continuing revenues increased by 33% to
GBP1.54m for the six months ended 31 March 2018 (GBP1.16m six
months ended 31 March 2017). The operating loss for the six months
ended 31 March 2018 was GBP1.94m (31 March 2017: GBP2.07m).
The table below shows the performance of the continuing business
between the UK and overseas:
GBP000s Revenue Operating profit/(loss)
Six months ended 2018 2017 2018 2017
------ ------ ------------ ------------
UK 1,042 887 244 246
------ ------ ------------ ------------
Europe 352 221 (565) (502)
------ ------ ------------ ------------
US 146 49 (758) (889)
------ ------ ------------ ------------
Total 1,540 1,157 (1,079) (1,145)
------ ------ ------------ ------------
Central unallocated costs (825) (857)
------ ------ ------------ ------------
Interest (31) (67)
------ ------ ------------ ------------
Loss from operations (1,935) (2,069)
------ ------ ------------ ------------
The UK business has generated a 17% growth in revenue. In the
second half of last year resources were added to our customer
facing resources and business system team to deliver the right
level of customer experience in our key market, and to improve
technical competitive advantage. This investment has increased the
cost base in the first half of this year by GBP0.15m in comparison
to the same period last year and consequently operating profit in
the UK has remained in line with the same period last year.
In Europe, the Group has invested an additional GBP0.2m in
people and other business development expenditure in comparison to
the same period last year. This investment in PPCP in the region
has generated strong revenue growth of 59%.
Following the decision to focus its US resources in the mid-west
and south-eastern states, the operating costs in the US have been
reduced. The operating cost reduction coupled with GBP0.1m increase
in revenues has reduced the operating loss in the territory from
GBP0.89m to GBP0.76m. The impact of the cost reduction in the US
will be more significant in the second half of the financial year
ending 30 September 2018 compared to the second half of the
financial year ended 30 September 2017.
At 31 March 2018, the staff headcount was 56 (31 March 2017:
57).
Headcount 31 March 31 March 30 September
as at 2018 2017 2017
No No No
UK 35 37 35
Europe 11 6 10
USA 10 14 16
--------- -------------
56 57 61
--------- --------- -------------
Central unallocated costs are broadly in line with the same
period last year.
The share-based compensation charge for both periods was
GBPNil.
Interest charges were GBP31k (2017: GBP67k) and relate solely to
the commitment fee on the unsecured loan note facility that was
entered into in November 2017.
Dividends and dividend policy
It is, at present, intended that no dividends will be paid by
the Group. The position will be reviewed if future operations lead
to significant levels of distributable profits, taking into account
any earnings, of which there can be no assurance, to be reinvested
in the Group's business.
Financial position
Net assets were GBP1.18m at 31 March 2018 (31 March 2017: net
liabilities GBP0.62m).
Cash and short-term deposits were GBP1.10m as at 31 March 2018
(at 31 March 2017: GBP0.71m). The Group had net cash at 31 March
2018 of GBP1.10m (at 31 March 2017: net borrowings of
GBP0.54m).
Cash flow
Net cash outflow from continuing operating activities for the
six months ended 31 March 2018 was GBP1.98m (six months ended 31
March 2017: GBP2.09m).
Post-retirement benefits
The PVG Group operates a defined contribution pension scheme and
the pension charge represents the amounts payable by the PVG Group
to the fund and into personal arrangements in respect of the
period.
Events after balance sheet date
The committed facility of GBP1.5m provided to PVG by Bybrook
Finance Solutions Limited ("BFSL") on 27 November 2017 has today
been increased to GBP2.25m on terms similar to those previously
agreed other than once drawn each tranche will attract interest for
the full term of the loan and the loan becomes repayable in the
event that the Company raises finance through the issue of shares.
The first tranche of GBP0.5m was drawn on 1 June 2018 with
remaining tranches totalling GBP1.75m available for drawdown
between 1 September 2018 and 1 August 2019. The facility attracts a
monthly charge of 0.5% on any amounts committed which increases to
1% per month for any amounts drawn. This arrangement provides PVG
with security of funding whilst at the same time being sufficiently
flexible to continue to consider alternative sources of funding.
Rajan Uppal, a director of PVG, is the sole shareholder and
director of BFSL.
Board changes and Board composition
Graham Dick BVSc MRCVS accepted the role of Non-Executive
Chairman of PVG with effect from 1 March 2018 and has been a
non-executive director of the Company since March 2015.
Juliet Thompson stepped down as Chairman and as a director of
PVG effective from 28 February 2018. Iain Ross resigned from his
position as a Non-Executive Director of the Company, with effect
from 16 October 2017, due to additional board responsibilities
elsewhere. The Board of Directors thanks Juliet and Iain for their
services to the Company and wish them all the best for their future
endeavours.
With Juliet Thompson stepping down, Graham remains the only
non-executive director on the board of PVG. The board is assessing
PVG's requirements with regards to the appointment of one or more
independent non-executive directors. Until such appointment is
made, Rajan Uppal will continue to be a member of the Audit,
Remuneration and Nomination Committees as advised in the Company's
2017 Annual Report.
Related party transactions
Related party transactions are disclosed in note 7 to the
condensed set of financial statements.
Risk and uncertainties
The principal risks and uncertainties affecting the business
activities of the Group were identified under the heading "Risk
management and principal risks" in the Strategic Report on pages 14
to 17 of the 2017 Annual Report, a copy of which is available on
the Company's website www.premiervetgroup.co.uk.
These comprise:
-- Market competition
-- Consumer Spending and Preferences
-- Brand Reputation
-- Litigation and consequent impact on reputation
-- New Initiatives and failure to expand the pet healthcare services
-- PVA's status as a Direct Debit originator being revoked
-- Information security and data protection
-- Attraction and retention of key employees
-- Continuity of operations
-- Management of growth and expansion
-- International expansion risk
-- Financial Liquidity Risk
In the view of the Board, the key risks and uncertainties for
the remaining six months of the financial year continue to be those
set out in the 2017 Annual Report. In particular the Market
competition risk is impacted by the increasing levels of corporate
consolidation within veterinary practices which is changing the
dynamics of the pharmaceutical product supply chain. This is
placing increased pressure on margins for Manufacturers.
These changes present both challenges and opportunities to the
Group. Customer retention can be impacted by corporate acquisitions
and there is ongoing pressure on pricing. However, the Group also
benefits by supporting its corporate customers who are acquiring
new practices. In addition, the changes in the industry provide
opportunities for the Group to offer solutions to its customers to
address these pressures but may result in less support from third
parties.
Going concern
As stated in note 2 to the condensed financial statements, The
Group made a loss from continuing operations for the period of
GBP1.9m (6 months ended 31 March 2017: GBP2.1m) and had net assets
of GBP1.2m (31 March 2017: net liabilities of GBP0.1m). The Group
had cash balances of GBP1.1m (2017: GBP0.7m).
As explained above, PVG has drawn the first GBP0.5m tranche of
loan notes on 1 June 2018 and has access to a further GBP1.75m in
unsecured loan notes available to be drawn down in tranches from 1
September 2018 to 1 August 2019 from BFSL.
The directors consider that with its current cash reserves and
the additional funds available from the committed funding facility,
the Group has sufficient resources to meet all current liabilities
as they fall due. This takes into consideration current market
conditions, the Group's financial position and the Group's
forecasts and projections, which include mitigations within the
control of the group. After allowing for reasonable possible
changes in trading performance and mitigating actions (including
cost cutting measures and withdrawal from loss making territories),
and after making enquiries, the directors have a reasonable
expectation that the Group and the Company have adequate resources
to continue in operational existence for the foreseeable future.
For these reasons, the directors continue to adopt the going
concern basis in preparing the financial statements.
Outlook
Continued growth in the number of pets on plan across all
geographical territories is expected.
The UK business is expected to remain profitable and our
business in the Netherlands is expected to become profitable by the
end of this financial year. The business in France is showing real
potential.
Whilst the growth in the US market continues to be slower than
previously anticipated, the Group has made significant investment
and addressed a number of the challenges that have been faced in
the market.
Our employees are one of our key strengths, and I am delighted
that we have been able to attract and retain such high calibre
staff both in the UK and in our overseas operations to enable us to
deliver our ongoing expansion strategy.
We look forward to announcing future developments in due
course.
RESPONSIBILITY STATEMENT
For the six months ended 31 March 2018, we confirm to the best
of our knowledge that:
(a) the condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting';
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
(c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related party
transactions that have taken place in the first six months of the
current financial year and that have materially affected the
financial position or performance of the entity during that period;
and any changes in the related party transactions described in the
last Annual Report that have done so).
By order of the Board,
Dominic Tonner Will Evans
Chief Executive Officer Chief Financial Officer
14 June 2018 14 June 2018
Registered office Registered number
New Bond House 04313987
Bond Street
Bristol
BS2 9AG
Condensed consolidated statement of comprehensive income
For the six months ended 31 March 2018 (unaudited)
6 months 6 months
ended ended
31 March 2018 31 March
Note 2017
GBP'000 GBP'000
Continuing operations Total Total
Revenue 1,540 1,157
Cost of sales (75) (33)
Gross Profit 1,465 1,124
Other administrative expenses (3,369) (3,126)
Loss from operations (1,904) (2,002)
Finance expense (31) (67)
Loss before income tax (1,935) (2,069)
Income tax - -
Loss for the period from continuing
operations (1,935) (2,069)
Profit for the period on discontinued
operations, net of tax - 321
----------------------------------------- ----- --------------- ----------
Loss and total comprehensive loss
for the period attributable to equity
holders of the parent company (1,935) (1,748)
----------------------------------------- ----- --------------- ----------
Loss per share for loss from continuing
operations attributable to the owners
of the parent during the period 3
Basic (pence) (12.6) (13.9)
Diluted (pence) (12.3) (13.9)
Loss per share for loss attributable
to the owners of the parent during
the period 3
Basic (pence) (12.6) (11.7)
Diluted (pence) (12.3) (11.7)
Condensed consolidated statement of comprehensive income
For the six months ended 31 March 2018 (unaudited)
6 months 6 months
ended ended
31 March 2018 31 March
Note 2017
GBP'000 GBP'000
Continuing operations Total Total
Loss for the year (1,935) (1,748)
Other comprehensive (expense)/income:
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation
of foreign operations (190) -
----------------------------------------------- ------ --------------- ----------
Other comprehensive (expense)/income
for the year attributable to equity
holders of the parent (2,125) (1,748)
------------------------------------------------------- --------------- ----------
Condensed consolidated statement of financial position
As at 31 March 2018 (unaudited)
As at As at As at
31 March 31 March 30 September
Note 2018 2017 2017
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 45 83 63
Intangible assets 462 318 432
Total non-current assets 507 401 495
Current assets
Trade and other receivables 656 708 705
Cash and cash equivalents 1,095 711 3,218
---------- ---------- --------------
1,751 1,419 3,923
Assets in disposal groups
classified as held for sale - 104 -
---------- ---------- --------------
Total current assets 1,751 1,523 3,923
Total assets 2,258 1,924 4,418
========== ========== ==============
Equity attributable to equity holders of the Company
Called up share capital 5 1,535 1,535 1,535
Share premium 5 5 5
Share based payments reserve 35 12 35
Reverse acquisition reserves 3,671 3,671 3,671
Retained earnings (4,064) (5,285) (1,939)
---------- ---------- --------------
Total equity 1,182 (62) 3,307
Current liabilities
Trade and other payables 810 705 845
Loans and borrowings - 900 -
Current tax liabilities 132 - 132
942 1,605 977
Liabilities in disposal
group classified as held
for sale - 21 -
---------- ---------- --------------
Total current liabilities 942 1,626 977
Non-current liabilities
Loans and borrowings - 350 -
Deferred tax provision 134 10 134
---------- ---------- --------------
Total non-current liabilities 134 360 134
Total liabilities 1,076 1,986 1,111
Total equity and liabilities 2,258 1,924 4,418
========== ========== ==============
Condensed consolidated statement of changes in equity
For the six months ended 31 March 2018 (unaudited)
Share
based Reverse
Share Share payments acquisition Retained
Note capital premium reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 1
October 2017 1,535 5 35 3,671 (1,939) 3,307
Loss and total comprehensive
income for the period: - - - - (2,125) (2,125)
Balance as at 31
March 2018 1,535 5 35 3,671 (4,064) 1,182
Balance as at 1
October 2016 1,491 1 35 3,671 (3,560) 1,638
-------------------------------------- ----------- --------- ---------- ------------- ---------- --------
Loss and total comprehensive
income for the period: - - - - (1,748) (1,748)
Transactions with
the owners
Share options exercised - - (23) - 23 -
Shares issued 44 4 - - - 48
Balance as at 31
March 2017 1,535 5 12 3,671 (5,285) (62)
-------------------------------------- ----------- --------- ---------- ------------- ---------- --------
Condensed consolidated statement of cash flows
For the six months ended 31 March 2018 (unaudited)
6 months 6 months
ended ended
31 March 31 March
2018 2017
GBP '000 GBP '000
Cash flows from:
Operating activities
Loss before income tax (1,935) (2,069)
Finance expense 31 67
Depreciation of property, plant and equipment 19 12
Amortisation of intangible assets 86 49
Decrease in trade and other receivables 12 11
Decrease in trade and other payables (191) (157)
--------- ---------
Cash used in continuing operations (1,978) (2,087)
Discontinued operations - 350
--------- ---------
Cash (used in)/generated from operations (1,978) (1,737)
Income taxes - -
--------- ---------
Net cash (outflow)/inflow from operating activities (1,978) (1,737)
Investing activities
Purchase of Property, Plant and Equipment (1) (25)
Purchase of Intangible Assets (116) (112)
--------- ---------
Net cash (used in)/from continuing investing activities (117) (137)
Disposal of discontinued activities - 1,000
--------- ---------
Net cash used in investing activities (117) 863
Financing activities
Issue of new shares (net of costs) - 48
Receipt of loan notes - 350
Interest paid (31) (67)
--------- ---------
Net cash (used in)/generated from financing activities (31) 331
Net (decrease)/increase in cash and cash equivalents (2,126) (543)
Cash and cash equivalents at beginning of period 3,218 1,254
Effect of foreign exchange rate changes 3 -
Cash and cash equivalents at end of period 1,095 711
========= =========
Shown as:
Cash and cash equivalents 1,095 711
1,095 711
========= =========
Notes to the financial information
1 General information
This interim financial information was authorised for issue on
14 June 2018. The information for the period ended 31 March 2018
does not constitute statutory accounts as defined in section 434 of
the Companies Act 2006. They have been prepared in accordance with
IAS 34 Interim Financial Reporting. They do not include all of the
information required in annual financial statements in accordance
with IFRS.
2 Significant accounting policies
The financial statements have been prepared in accordance with
the recognition and measurement principles of International
Financial Reporting Standards (IFRS) as adopted by the European
Union.
The nancial statements have been prepared on the historical cost
basis. The principal accounting policies adopted are set out
below.
Basis of preparation
The half-year condensed consolidated financial statements for
the six months ended 31 March 2018 have been prepared in accordance
with the Disclosure and Transparency Rules (DTR) of the Financial
Services Authority and with IAS 34 'Interim Financial Reporting'.
The half-year condensed consolidated financial statements do not
include all the information and disclosures required in the annual
financial statements and should be read in conjunction with the
Group's annual financial statements as at 30 September 2017, which
have been prepared in accordance with IFRS as adopted by the
European Union.
This half-year condensed consolidated financial information does
not comprise statutory accounts within the meaning of Section 434
of the Companies Act 2006. Statutory accounts for the year ended 30
September 2017 were approved by the Board of Directors on 27
November 2017. These accounts, which contained an unqualified audit
report under Section 495 of the Companies Act 2006 and which did
not make any statements under Section 498 of the Companies Act
2006, have been delivered to the Registrar of Companies in
accordance with Section 441 of the Companies Act 2006.
There have been no significant changes to estimates of amounts
reported in prior financial years.
The accounting policies adopted in the preparation of the
half-year condensed consolidated financial statements are
consistent with those followed in the preparation of the Group's
annual financial statements for the year ended 30 September
2017.
Going concern
The Group made a loss from continuing operations for the period
of GBP1.9m (6 months ended 31 March 2017: GBP2.1m) and had net
assets of GBP1.2m (31 March 2017: net liabilities of GBP0.1m). The
Group had cash balances of GBP1.1m (2017: GBP0.7m). Cash used in
continuing operations for six months to 31 March 2018 was GBP1.98m
(6 months ended 31 March 2017: GBP2.09m).
The committed facility of GBP1.5m provided to PVG by Bybrook
Finance Solutions Limited on 27 November 2017 has been increased to
GBP2.25m on terms similar to those previously agreed other than
once drawn each tranche will attract interest for the full term of
the loan. The first tranche of GBP0.5m was drawn on 1 June 2018
with remaining tranches totalling GBP1.75m available for draw down
between 1 September 2018 and 1 August 2019. The facility attracts a
monthly charge of 0.5% on any amounts committed which increases to
1% per month for any amounts drawn. This arrangement provides PVG
with security of funding whilst at the same time being sufficiently
flexible to continue to consider alternative sources of funding.
Rajan Uppal, a director of PVG, is the sole shareholder and
director of BFSL.
The directors consider that with its current cash reserves and
the additional funds available from the committed funding facility,
the Group has sufficient resources to meet all current liabilities
as they fall due. This takes into consideration current market
conditions, the Group's financial position and the Group's
forecasts and projections, which include mitigations within the
control of the group. After allowing for reasonable possible
changes in trading performance and mitigating actions (including
cost cutting measures and withdrawal from loss making territories),
and after making enquiries, the directors have a reasonable
expectation that the Group and the Company have adequate resources
to continue in operational existence for the foreseeable future.
For these reasons, the directors continue to adopt the going
concern basis in preparing the financial statements.
Basis of consolidation
The condensed consolidated financial statements consolidate
those of the parent company and all of its subsidiaries as of 31
March 2018.
All transactions and balances between Group companies are
eliminated on consolidation, including unrealised gains and losses
on transactions between Group companies. Amounts reported in the
financial statements of subsidiaries have been adjusted where
necessary to ensure consistency with the accounting policies
adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries
acquired or disposed of during the year are recognised from the
effective date of acquisition, or up to the effective date of
disposal, as applicable.
Revenue
Revenue for the Group is measured at the fair value of the
consideration received or receivable. The Group recognises revenue
for services provided when the amount of revenue can be reliably
measured and it is probable that future economic benefits will flow
to the entity. All intercompany revenues are eliminated on
consolidation.
The Group had the following income stream:
-- Premier Pet Care Plan ("PPCP"): Fees received for the
collection and management of direct debits and related services are
recognised on a receipts basis. A flat fee is received for every
direct debit collected. An admin fee for setting up each member
practice is charged.
Expenditure
Expenditure is recognised in respect of goods and services
received when supplied in accordance with contractual terms.
Provision is made when an obligation exists for a future liability
relating to a past event and where the amount of the obligation can
be reliably estimated.
Financial assets
The Group classifies its financial assets into the categories,
discussed below, due to the purpose for which the asset was
acquired.
Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
arise principally through the provision of services to customers
(e.g. trade receivables), but also incorporate other types of
contractual monetary asset. They are initially recognised at fair
value plus transactions costs that are directly attributable to
their acquisition or issue and are subsequently carried at
amortised cost using the effective interest rate method, less
provision for impairment.
The Group's loans and receivables comprise of trade and other
receivables included within the consolidated statement of financial
position.
Cash and cash equivalents include cash held at bank and bank
deposits available on demand.
Impairment provisions are recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Group will be unable to collect all of the amounts due under
the terms receivable, the amount of such a provision being the
difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired
receivable. For trade receivables, which are reported net, such
provisions are recorded in a separate allowance account with the
loss being recognised within administrative expenses in the income
statement. On confirmation that the trade receivables will not be
collectable, the gross carrying value of the asset is written off
against the associated provision.
Financial liabilities
The Group classifies its financial liabilities as other
financial liabilities which include the following:
-- Loans which are initially recognised at fair value net any of
transaction costs directly attributable to the issue of the
instrument. Where the terms of a loan facility are re-arranged,
associated fees are expensed up front when the re-arrangement is a
substantial modification. Such interest-bearing liabilities are
subsequently measured at amortised cost ensuring the interest
element of the borrowing is expensed over the repayment period at a
constant rate.
-- Trade payables, other borrowings and other short-term
monetary liabilities, which are initially recognised at fair value
and subsequently carried at amortised cost using the effective
interest method.
-- Finance charges, including premiums payable on settlement or
redemption, are accounted for on an accruals basis and are
calculated using the effective interest method and are added to the
carrying amount of the liability to the extent that they are not
settled in the period in which they arise.
-- Where a financial instrument contains an embedded derivative
within a non-derivative host contract and the embedded derivative
is not closely related to the host contract the derivative
component is accounted for separately as a fair value through
profit and loss financial instrument. The fair value of the
instrument is recognised on the statement of financial position
with gains and losses through the income statement. No hedge
accounting is applied.
Fair value hierarchy
Certain of the disclosures about fair value of nancial
instruments include the classification of fair values within a
three-level hierarchy. The three levels are defined based on the
observably of signi cant inputs into the measurements as
follows:
-- Level 1: Quoted prices, in active markets;
-- Level 2: Level 1 quoted prices are not available but fair
value is based on observable market data;
-- Level 3: Inputs that are not based on observable market data.
Share capital
Financial instruments issued by the Group are treated as equity
only to the extent that they do not meet the definition of a
financial liability. The Group's ordinary shares are classified as
equity instruments.
The share premium reserve represents the surplus of
consideration paid for shares above their nominal value.
Share-based payments
The cost of equity-se-ttled transactions is measured by
reference to the fair value at the date at which they are granted
and is recognised as an expense over the vesting period which ends
on the date on which the relevant party become fully entitled to
the award. Fair value is determined by using the Black-Scholes
pricing model. No account is taken of any vesting conditions other
than conditions linked to the price of shares of the Company in
measuring fair value.
At each period end date before vesting, the cumulative expense
is calculated; representing the extent to which the vesting period
has expired and Management's best estimate of the achievement or
otherwise of non-market conditions and of the number of equity
instruments that will ultimately vest. The movement in cumulative
expenses since the previous period end date is recognised in the
income statement with a corresponding entry in the statement of
financial position.
Operating segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision maker has been identified as the
management team (excluding Non-Executive Directors) including the
Chief Executive Officer.
Management review revenue and gross profit of two continuing
separate operating segments against budget. The remaining costs,
including administrative costs and finance expenses, are reviewed
in total. Assets and liabilities of the Group are not allocated to
an operating segment.
Non-current assets held for sale and disposal groups
Non-current assets and disposal groups are classified as held
for sale when:
-- they are available for immediate sale;
-- management is committed to a plan to sell;
-- it is unlikely that significant changes to the plan will be
made or that the plan will be withdrawn;
-- an active programme to locate a buyer has been initiated;
-- the asset or disposal group is being marketed at a reasonable
price in relation to its fair value; and,
-- a sale is expected to complete within 12 months from the date of classification.
Non-current assets and disposal groups classified as held for
sale are measured at the lower of:
-- their carrying amount immediately prior to being classified
as held for sale in accordance with the group's accounting policy;
and,
-- fair value less costs of disposal.
Following their classification as held for sale, non-current
assets (including those in a disposal group) are not
depreciated.
The results of operations disposed during the year are included
in the consolidated statement of comprehensive income up to the
date of disposal.
Profit or loss from discontinued operations
A discontinued operation is a component of the Group that either
has been disposed of or is classified as held for sale. Profit or
loss from discontinued operations comprises the post-tax profit or
loss of discontinued operations and the post-tax gain or loss
resulting from the measurement and disposal of assets classified as
held for sale.
Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including the expectations
of future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. The estimates and assumptions that
have a significant risk of causing a material adjustment to the
carrying amounts of assets and liabilities within the next
financial year are discussed below.
Software development
Software development is amortised over the useful lives of the
assets. Useful lives are based on the management's estimates of the
period that the assets will generate revenue, which are reviewed
annually for continued appropriateness. The carrying values are
tested for impairment when there is an indication that the value of
the assets might be impaired. When carrying out impairment tests
these would be based upon future cash flow forecasts and these
forecasts would be based upon management judgement. Future events
could cause the assumptions to change, therefore this could have an
adverse effect on the future results of the Group.
3 Loss per share
The calculation of the basic loss per share is based on the loss
attributable to ordinary shareholders divided by the weighted
average number of shares in issue during the period.
From continuing and discontinued operations
The calculation of the basic and diluted earnings per share is
based on the following data:
6 months 6 months
ended ended
31 March 31 March
2018 2017
GBP'000 GBP'000
Loss per share attributable to the
owners of the parent during the period
Loss for the period from continuing
operations (1,935) (2,069)
Loss for the period from discontinuing
operations - 321
----------------------------------------------- ----------- -----------
Profit/(loss) per share attributable
to the owners of the parent during
the period (1,935) (1,748)
----------------------------------------------- ----------- -----------
31 March 31 March
2018 2017
Number of shares
Weighted average number of ordinary shares
of the purposes of basic earnings per
share 15,346,950 14,911,402
Effect of dilutive potential ordinary
shares from share options 399,035 297,599
----------------------------------------------- ----------- -------------
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 15,745,985 15,209,001
6 months 6 months
ended ended
31 March 31 March
2018 2017
Profit per share for profit from discontinued
operations attributable to the equity
holders of the parent company during the
period
Basic (pence) - 2.2
Diluted (pence) - 2.2
----------------------------------------------- ----------- -------------
4 Segmental reporting
Management have defined operating segments as those on which
results are considered by the Chief Executive Officer.
Administrative expenses (including amortisation, impairment and
depreciation), finance costs and income tax expenses are monitored
centrally and are not allocated to operating segments. Further to
this, assets and liabilities are not allocated to operating
segments as they are shared by the Group. These operating segments
are monitored and strategic decisions are made on the basis of
adjusted segment operating results. The categorised as follows:
All revenue is derived from external customers.
PPCP Total Continuing Discontinued
PPCP UK PPCP Europe US Operations Operations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
6 months ended
31 March 2018
Revenue 1,042 352 146 1,540 - 1,540
Cost of sales (21) (24) (30) (75) - (75)
--------------------- -------- -------------- -------- ----------------- ------------- --------
Gross Profit 1,021 328 116 1,465 - 1,465
--------------------- -------- -------------- -------- ----------------- ------------- --------
Administrative
expense (777) (893) (874) (2,544) - (2,544)
--------------------- -------- -------------- -------- ----------------- ------------- --------
Loss before central
costs 244 (565) (758) (1,079) - (1,079)
--------------------- -------- -------------- -------- ----------------- ------------- --------
Central costs (825) - (825)
Finance expense (31) (31)
--------------------- -------- -------------- -------- ----------------- ------------- --------
Loss before income
tax (1,935) - (1.935)
--------------------- -------- -------------- -------- ----------------- ------------- --------
PPCP PPCP PPCP Total Continuing Discontinued
UK Europe US Operations Operations Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
6 months ended
31 March 2017
Revenue 887 221 49 1,157 508 1,665
Cost of sales (17) (14) (2) (33) - (33)
--------------------- -------- -------- -------- ----------------- ------------- --------
Gross Profit 870 207 47 1,124 508 1,632
--------------------- -------- -------- -------- ----------------- ------------- --------
Administrative
expense (624) (708) (936) (2,269) (187) (2,456)
--------------------- -------- -------- -------- ----------------- ------------- --------
Profit/(loss)
before central
costs 246 (502) (889) (1,145) 321 (824)
--------------------- -------- -------- -------- ----------------- ------------- --------
Central costs (857) - (857)
Finance expense (67) - (67)
--------------------- -------- -------- -------- ----------------- ------------- --------
Loss before income
tax (2,069) 321 (1,748)
--------------------- -------- -------- -------- ----------------- ------------- --------
5 Share capital
Ordinary shares Deferred shares Total
No GBP'000 No GBP'000 GBP'000
Shares 31 March 2017
(Ordinary 10 pence,
Deferred 90 pence) 15,346,950 1,535 - - 1,535
------------- -------- ------ ---------- --------
Shares 30 September
2017 (Ordinary 10 pence) 15,346,950 1,535 - - 1,535
------------- -------- ------ ---------- --------
Shares 31 March 2018
(Ordinary 10 pence) 15,346,950 1,535 - - 1,535
============= ======== ====== ========== ========
6 Share-based payments - equity-settled share option schemes, LTIPs
No options have been granted in the period ended 31 March 2018.
In the comparative period ended 31 March 2017, options over
ordinary shares were granted on 3 March 2017 under the 2014 Ark
Therapeutics Group plc(*) Enterprise Management Incentive Share
Option Plan and the 2014 Ark Therapeutics Group plc(*) Unapproved
Share Option Plan (together, the "Plans") at an exercise price of
238.75 pence per share.
Subject to the achievement of pre-determined performance
criteria, the options granted under the Plans are exercisable three
years from the date of grant.
(*) Ark Therapeutics Group plc changed its name to Premier
Veterinary Group plc in March 2015.
Options and warrants outstanding
6 months to 6 months to 12 months to
31 March 31 March 30 September
2018 2017 2017
No. No. No.
At beginning of period 399,035 718,552 718,552
----------------------------- ------------ ------------ --------------
Granted during period - 120,000 120,000
Exercised during the period - (439,517) (439,517)
Expired during the period - - -
------------ ------------ --------------
At end of period 399,035 399,035 399,035
----------------------------- ------------ ------------ --------------
Options exercisable
Number Weighted Latest exercise
of options average exercise date
price
At 31/03/2018 399,035 71.8p 03/03/2027
--------------- ------------ ------------------ ----------------
At 31/03/2017 399,035 71.2p 03/03/2027
--------------- ------------ ------------------ ----------------
At 30/09/2017 399,035 71.8p 03/03/2027
--------------- ------------ ------------------ ----------------
The fair value of share options expense recognised in the period
is determined using the Black-Scholes model which takes into
account the terms and conditions upon which the shares were
awarded. The Company recognised a charge GBPNil (2016: GBPNIL) in
relation to share based payment.
7 Related party transactions
The Group operates the Ark Therapeutics Group plc Family Benefit
Trust ("FBT"). Amounts due from the FBT were GBPNil (31 March 2017:
GBPNIL, 30 September 2017: GBPNil).
Bybrook Finance Solutions Limited ("BFSL") is under control of a
director of the Company, Rajan Uppal. On 27 November 2017, PVG
entered into an arrangement with BFSL whereby BFSL agreed to
provide GBP1.5m in unsecured loan notes. On 14 June 2018 the
arrangement was amended to provide for the total facility to be
increased to GBP2.25m on terms similar to those previously agreed
other than once drawn each tranche will attract interest for the
full term of the loan and the loan becomes repayable in the event
that the Company raises finance through the issue of shares. The
first tranche of GBP0.5m was drawn on 1 June 2018 with remaining
tranches totalling GBP1.75m available for draw down on specified
dates between 1 September 2018 and 1 August 2019. PVG has the right
to cancel the commitment at any time before drawdown without
penalty. Any amounts drawn down are repayable after two years from
the date of draw down or in the event of an equity raise if
earlier. The facility attracts a monthly charge of 0.5% on any
amounts committed which increases to 1% per month for any amounts
drawn. At 31 March 2018, the outstanding commitment was GBP1.5m as
no amounts had yet been drawn. Commitment fees charged during the
period were GBP30,750. Interest charged by BFSL in the comparative
period to 31 March 2017 was GBP7,000.
Independent review report to Premier Veterinary Group plc
Report on the condensed consolidated financial statements
Our conclusion
We have reviewed Premier Veterinary Group plc's condensed
consolidated financial statements (the "interim financial
statements") in the interim review of Premier Veterinary Group plc
for the 6 month period ended 31 March 2018. Based on our review,
nothing has come to our attention that causes us to believe that
the interim financial statements are not prepared, in all material
respects, in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union and
the Disclosure Guidance and Transparency Rules sourcebook of the
United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the condensed consolidated statement of financial position as at 31 March 2018;
-- the condensed consolidated statement of comprehensive income for the period then ended;
-- the condensed consolidated statement of cash flows for the period then ended;
-- the condensed consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim review
have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
As disclosed in note 2 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim review, including the interim financial statements,
is the responsibility of, and has been approved by, the directors.
The directors are responsible for preparing the interim review in
accordance with the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the interim review based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
review and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
Bristol
14 June 2018
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
IR SFIFULFASEEM
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