TIDMPVG
RNS Number : 7320D
Premier Veterinary Group PLC
28 June 2019
PREMIER VETERINARY GROUP PLC
("PVG", the "Company" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHSED 31 MARCH 2019
London, UK, 28 June 2019 - Premier Veterinary Group plc today
announces its unaudited interim results for the six months ended 31
March 2019.
HIGHLIGHTS
-- 30% 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 275,000 (31 March 2018:
212,000).
2019 2018 Change
000's 000's
----- ----- ------
United Kingdom 214 171 +25%
----- ----- ------
Europe 47 35 +34%
----- ----- ------
US 14 6 +133%
----- ----- ------
Total 275 212 +30%
----- ----- ------
-- 21% increase in total revenue
Six months ended 31 March 2019 2018 Change
UK GBP1,048k GBP1,042k +1%
----------- ----------- -------
Europe GBP468k GBP352k +33%
----------- ----------- -------
US GBP351k GBP146K +140%
----------- ----------- -------
Total revenue GBP1,867k GBP1,540k +21%
----------- ----------- -------
-- Loss before interest and tax to 31 March 2019 GBP1.39m (31 March 2018: GBP1.90m).
-- Cash and short-term deposits of GBP1.68m as at 31 March 2019 (at 31 March 2018: GBP1.10m).
-- Cash outflow from operating activities for six months to 31
March 2019 of GBP1.50m (six months ended 31 March 2018:
GBP1.98m).
Post period events
-- W.H. Ireland appointed sole broker effective from 25 June 2019.
Dominic Tonner, CEO of PVG commented:
"Over the last six months PVG has continued to see solid
progress in the number of pets on plan across the UK, Europe and US
and this progress has continued in April and May. The rollout of
the US plan with PVCC continues and growth in the US is
encouraging. We expect revenues to increase incrementally in the
second half year as compared to the first half and for profits to
remain in line with Management expectations. We continue to explore
options that will enable the Group to accelerate profitability in
Europe, capitalise on the investment that has already been made in
the US and consolidate our position in the UK"
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 www.premiervetgroup.co.uk
Dominic Tonner, Chief Executive
Officer +44 (0)117 970 4130
Andy Paull, Chief Financial
Officer
WH Ireland Limited (Broker) www.whirelandplc.com
Mike Coe / Chris Savidge +44 (0) 207 220 1666
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 development,
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. The programme facilitates gold standard care for pets at an
affordable price for the pet owner, by way of fixed monthly
payments.
Overview and strategic update
As stated in the Annual Report and Accounts for the year ended
30 September 2018 (the "2018 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;
-- continue to invest 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 six 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.
We continue to invest in our IT department and platform to
ensure the business delivers enhanced levels of customer support
and experience in an efficient way.
Regional review
UK
In the UK, the number of pets on plan has increased by 25% to
214,000 as at 31 March 2019 (31 March 2018: 171,000). The pipeline
of opportunities to sign new clinics on to PPCP remains strong and
the ongoing rate of growth in Pets on Plan in this well-established
market is encouraging. Market consolidation driven by corporate
acquisition continues to provide challenge to improve and diversify
services and the opportunity to win substantial contracts. The
increase in revenues from veterinary clinics relating to the
continued growth in pets on plan has been partly offset by a
reduction in revenues from other third parties.
Europe
The number of pets on plan in Europe has increased by 34% to
47,000 (31 March 2018: 35,000).
The Group's most significant territory in Europe is the
Netherlands which made a small loss in the first half year and
remains on course to become profitable during the financial year
ending 30 September 2019. The number of pets on plan has grown by
29% to 36,000 as at 31 March 2019 (31 March 2018: 28,000). 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 2019, there were 10,000 pets on plan (31
March 2018: 4,000). Revenue doubled year on year for the first half
of this financial year with operating expense at the same levels as
2018.
US
The number of pets on plan has increased to 14,000 (31 March
2018: 6,000). The investment made in the US and the changes
implemented to our operating model over the previous financial year
have established a platform from which we are seeing encouraging
growth.
The net growth in pets on plan, being new pets signed up less
pets cancelled, has continued to improve following the
technological enhancements implemented in January 2018 and with the
carefully implemented roll out across the PVCC estate, the sign up
rate is strong and improving. The care taken to ensure that these
launches are done well has meant that the roll out is taking longer
than anticipated but the resulting performance is stronger than
expected.
We are continuing to explore opportunities with other corporate
groups to enable the Group to capitalise on the performance we have
seen to date.
Financial and non-financial key performance indicators
("KPIs")
As set out in the 2018 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 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 active pets who are members of
a PPCP.
PPCP fees are generated from the number of pets who are members
of a PPCP each month and are recognised on a receipts basis. A flat
fee is received for every active pet.
The Group's revenues for the continuing business for the six
months ended 31 March 2019 increased by 21% to GBP1.87m (31 March
2018: GBP1.54m).
The total number of active pet members increased to 1,601,000
over the six-month period to 31 March 2019 (31 March 2018:
1,234,000), an increase of 30%.
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 2019, the number of PPCP member clinics in each
region was:
Total as at Total as at
31 March 2019 31 March 2018 % growth
000's 000's
--------------- --------------- ---------
UK (including Northern Ireland) 743 644 15%
--------------- --------------- ---------
* Netherlands 272 234 16%
--------------- --------------- ---------
* France 237 108 119%
--------------- --------------- ---------
* Other European countries 71 71 0%
--------------- --------------- ---------
Europe 580 413 40%
--------------- --------------- ---------
US 261 241 8%
--------------- --------------- ---------
Total 1,584 1,298 22%
--------------- --------------- ---------
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.
As at As at As at As at As at
Mar-18 Jun-18 Sept-18 Dec-18 Mar-19
000's 000's 000's 000's 000's
------- ------- -------- ------- -------
United Kingdom 171 181 193 206 214
------- ------- -------- ------- -------
Europe 35 38 42 45 47
------- ------- -------- ------- -------
US 6 7 9 11 14
------- ------- -------- ------- -------
Total no of fee generating
pets on plan 212 226 244 262 275
------- ------- -------- ------- -------
Overall, the number of pets administered by PPCP has increased
by 30% to 275,000 as at 31 March 2019 (31 March 2018: 212,000). In
the UK, the number of pets on plan has increased by 25% to 214,000
as at 31 March 2019 (31 March 2018: 171,000). The number of pets on
plan in Europe has increased by 34% to 47,000 (31 March 2018:
35,000).
In the US the number of pets on plan has increased by 133% to
14,000 (31 March 2018: 6,000).
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 2019 compared to the same period last
year.
Value of transactions processed 31 March 31 March
in 6 months ended 2019 2018 % growth
GBP000s GBP000s
--------- --------- ---------
UK 18,164 14,512 25%
--------- --------- ---------
Europe 4,046 2,844 42%
--------- --------- ---------
US 2,014 829 143%
--------- --------- ---------
Total 24,224 18,185 33%
--------- --------- ---------
Results for the six months ended 31 March 2019
The Group's total continuing revenues increased by 21% to
GBP1.87m for the six months ended 31 March 2019 (GBP1.54m six
months ended 31 March 2018). The operating loss for the six months
ended 31 March 2019 was GBP1.57m (31 March 2018: GBP1.94m).
The table below shows the performance of the continuing business
of the UK and overseas:
Revenue Operating profit/(loss)
GBP000's GBP000's
-------------- --------------------------
Six months ended 2019 2018 2019 2018
------ ------ ------------ ------------
UK 1,048 1,042 183 244
------ ------ ------------ ------------
Europe 468 352 (354) (565)
------ ------ ------------ ------------
US 351 146 (487) (758)
------ ------ ------------ ------------
Total 1,867 1,540 (658) (1,079)
------ ------ ------------ ------------
Central unallocated costs (732) (825)
------ ------ ------------ ------------
Loss before interest and
tax (1,390) (1,904)
------ ------ ------------ ------------
Interest (185) (31)
------ ------ ------------ ------------
Loss from operations (1,575) (1,935)
------ ------ ------------ ------------
The UK business has seen a 1% growth in revenue. Whilst the
number of fee generating pets on plan grew by 25% there was a
reduction in other income which, despite operating costs being in
line with the same period last year, has in turn impacted operating
profit.
In Europe, the investment in previous years has driven strong
pets on plan and revenue growth of over 33% over last year whilst
the cost base has been controlled to deliver improved
profitability.
US operating costs in the US have further reduced by GBP0.1m
year on year in the first half of the year despite supporting the
roll out of the PVCC clinic contract and delivering 140% growth in
revenue. The operating cost reduction coupled with GBP0.17m
increase in revenues has reduced the operating loss in the
territory from GBP0.76m to GBP0.49m. Whilst the year on year impact
of cost reductions will lessen in the second half of the year, we
anticipate continued revenue growth.
At 31 March 2019, the staff headcount was 50 (31 March 2018:
56).
Headcount 31 March 31 March 30 September
as at 2019 2018 2018
No No No
UK 33 35 34
Europe 10 11 11
USA 7 10 9
--------- -------------
50 56 54
--------- --------- -------------
Central unallocated costs have decreased by 11% compared to the
same period in the prior year.
The share-based compensation charge for both periods was
GBPNil.
Interest charges were GBP185k (2018: GBP31k) and relate solely
to interest and amortised arrangement fee on the unsecured loan
note facility that was entered into in November 2017 and the
replacement facility entered into in January 2019.
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, having taken into
account any cash that needs to be reinvested in the Group's
business.
Financial position
Total assets less current liabilities were GBP2.165m as at 31
March 2019 (31 March 2018: GBP1.18).
Net liabilities were GBP1.79m at 31 March 2019 including long
term financing of GBP3.85m (31 March 2018: net assets
GBP1.18m).
Cash and short-term deposits were GBP1.68m as at 31 March 2019
(at 31 March 2018: GBP1.10m).
Cash flow
Net cash outflow from continuing operating activities for the
six months ended 31 March 2019 was GBP1.50m (six months ended 31
March 2018: GBP1.98m).
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.
Board changes and Board composition
Will Evans resigned from the role of Chief Financial Officer
with effect from 30 November 2018 and has been replaced by Andrew
Paull. The Board thanks Will for his services to the Company and
wishes him all the best for the future.
Following Andrew Paull's appointment to Chief Financial Officer
with effect from 30 November 2018 and Neil Wood's appointment to
Non-Executive Director with effect from 3 September 2018, both
Andrew and Neil were put forward for election at the AGM on 27
March 2019. The resolutions were duly passed on a show of
hands.
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 and financial risks" in the Strategic
Report on pages 20 to 23 of the 2018 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 2018 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 in the form of sponsorship by manufacturers for
example.
Going concern
As stated in note 2 to the condensed financial statements, The
Group made a loss from continuing operations for the period of
GBP1.6m (six months ended 31 March 2018: GBP1.9m) and had net
liabilities of GBP1.8m (31 March 2018: net assets of GBP1.2m). The
Group had cash balances of GBP1.7m (2018: GBP1.1m).
On 25 January 2019, the Company entered into a loan agreement
with Bybrook Finance Solutions Limited ("BFSL") whereby BFSL agreed
to provide a committed loan facility of GBP3.85m repayable by the
Group on or before 25 April 2019. The Company subsequently
exercised the right to extend the repayment date to 25 January 2021
by issuing warrants to BFSL to acquire 767,347 of ordinary GBP0.10
shares at par. The facility was used to repay the previous loan
notes issued and provided GBP2.0m of additional working capital
which was drawn down upon completion of the agreement. Crossroads
Finance Limited, a company jointly owned and controlled by Dominic
Tonner, Chief Executive Officer of PVG, and his spouse,
participated in the funding by entering into direct arrangements
with BFSL. 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.
Outlook
Continued growth in the number of pets on plan across all
geographical territories is expected.
The UK business is expected to remain profitable, our business
in the Netherlands is expected to become profitable on a monthly
basis by the end of this financial year and the business in France
has grown strongly year over year.
The US market has begun to deliver results and we now have a
model which we are confident to expand.
We will continue to strengthen our team and implement high
quality IT developments which will enable us to continue to
efficiently and effectively deliver our ongoing expansion
strategy.
RESPONSIBILITY STATEMENT
For the six months ended 31 March 2019, 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 Andy Paull
Chief Executive Officer Chief Financial Officer
28 June 2018 28 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 2019 (unaudited)
6 months 6 months
ended ended
31 March 2019 31 March
Note 2018
GBP'000 GBP'000
Continuing operations Total Total
Revenue 1,867 1,540
Cost of sales (125) (75)
Gross profit 1,742 1,465
Other administrative expenses (3,132) (3,369)
Loss from operations (1,390) (1,904)
Finance expense (185) (31)
Loss before income tax (1,575) (1,935)
Income tax - -
Loss and total comprehensive loss
for the period attributable to equity
holders of the parent company (1,575) (1,935)
---------------------------------------- ----- --------------- ----------
Loss per share for loss attributable
to the owners of the parent during
the period 3
Basic (pence) (10.3) (12.6)
Diluted (pence) (10.0) (12.3)
Condensed consolidated statement of comprehensive income
For the six months ended 31 March 2019 (unaudited)
6 months 6 months
ended ended
31 March 2019 31 March
Note 2018
GBP'000 GBP'000
Total Total
Loss for the year (1,575) (1,935)
Other comprehensive (expense)/income:
Items that may be reclassified subsequently
to profit or loss:
Exchange differences on translation
of foreign operations 40 (190)
------------------------------------------------------- --------------- ----------
Other comprehensive (expense)/income
for the year attributable to equity
holders of the parent (1,535) (2,125)
------------------------------------------------------- --------------- ----------
Condensed consolidated statement of financial position
As at 31 March 2019 (unaudited)
As at As at As at
31 March 31 March 30 September
Note 2019 2018 2018
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 26 45 32
Intangible assets 551 462 471
Total non-current assets 577 507 503
Current assets
Trade and other receivables 825 656 534
Cash and cash equivalents 1,677 1,095 648
---------- ---------- --------------
Total current assets 2,502 1,751 1,182
Total assets 3,079 2,258 1,685
========== ========== ==============
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 35 35
Reverse acquisition reserves 3,671 3,671 3,671
Retained earnings (7,035) (4,064) (5,500)
---------- ---------- --------------
Total equity (1,789) 1,182 (254)
Current liabilities
Trade and other payables 782 810 703
Current tax liabilities 132 132 133
Total current liabilities 914 942 836
Non-current liabilities
Loans and borrowings 3,850 - 1,000
Deferred tax provision 104 134 103
---------- ---------- --------------
Total non-current liabilities 3,954 134 1,103
Total liabilities 4,868 1,076 1,939
Total equity and liabilities 3,079 2,258 1,685
========== ========== ==============
Condensed consolidated statement of changes in equity
For the six months ended 31 March 2019 (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
Loss and total comprehensive
income for the period: - - - - (1,436) (1,436)
Balance as at 1
October 2018 1,535 5 35 3,671 (5,500) (254)
-------------------------------------- ----------- --------- ---------- ------------- ---------- --------
Loss and total comprehensive
income for the period: - - - - (1,535) (1,535)
Balance as at 31
March 2019 1,535 5 35 3,671 (7,035) (1,789)
-------------------------------------- ----------- --------- ---------- ------------- ---------- --------
Condensed consolidated statement of cash flows
For the six months ended 31 March 2019 (unaudited)
6 months 6 months
ended Ended
31 March 31 March
2019 2018
GBP '000 GBP '000
Cash flows from:
Operating activities
Loss before income tax (1,575) (1,935)
Finance expense 185 31
Depreciation of property, plant and equipment 16 19
Amortisation of intangible assets 90 86
(Increase)/decrease in trade and other receivables (291) 12
Increase/(decrease) in trade and other payables 79 (191)
--------- ---------
Cash used in operations (1,496) (1,978)
Income taxes - -
--------- ---------
Net cash outflow from operating activities (1,496) (1,978)
Investing activities
Purchase of property, plant and equipment (9) (1)
Purchase of intangible assets (171) (116)
--------- ---------
Net cash used in investing activities (180) (117)
Loan notes issues 2,850 -
Interest paid (185) (31)
--------- ---------
Net cash generated from/(used in) financing activities 2,665 (31)
Net increase/(decrease) in cash and cash equivalents 989 (2,126)
Cash and cash equivalents at beginning of period 648 3,218
Effect of foreign exchange rate changes 40 3
Cash and cash equivalents at end of period 1,677 1,095
========= =========
Shown as:
Cash and cash equivalents 1,677 1,095
1,677 1,095
========= =========
Notes to the financial information
1 General information
This interim financial information was authorised for issue on
28 June 2018. The information for the period ended 31 March 2019
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 2019 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 2018, 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 2018 were approved by the Board of Directors on 30
January 2019. 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
2018.
Going concern
The Group made a loss from continuing operations for the period
of GBP1.6m (six months ended 31 March 2018: GBP1.9m) and had net
liabilities of GBP1.8m (31 March 2018: net assets of GBP1.2m). The
Group had cash balances of GBP1.7m (2018: GBP1.1m). Cash used in
continuing operations for the six months to 31 March 2018 was
GBP1.50m (6 months ended 31 March 2018: GBP1.98m).
On 25 January 2019, the Company entered into a loan agreement
with Bybrook Finance Solutions Limited ("BFSL") whereby BFSL agreed
to provide a committed loan facility of GBP3.85m repayable by the
Group on or before 25 April 2019. The Company subsequently has
exercised the right to extend the repayment date to 25 January 2021
by issuing warrants to BFSL to acquire 767,347 of ordinary GBP0.10
shares at par. The facility was used to repay the previous loan
notes issued and provided GBP2.0m of additional working capital
which was drawn down upon completion of the agreement. Crossroads
Finance Limited, a company jointly owned and controlled by Dominic
Tonner, Chief Executive Officer of PVG, and his spouse,
participated in the funding by entering into direct arrangements
with BFSL. 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 2019.
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's primary income stream is generated from Premier Pet
Care Plan. Fees received for the collection and management of
monthly transactions on behalf of veterinary practices external to
the Group are recognised on a receipts basis. There are four main
elements within this income stream:
-- Launch fees: Fee received from a new clinic upon launch of scheme.
-- Admin fees: Fee paid by pet owner upon introduction to scheme.
-- Transaction fees: A flat fee received for every transaction processed.
-- Other: Additional external support fees.
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 in accordance with 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:
-- Bank overdrafts which are initially recognised at fair value
and subsequently carried at amortised cost using the effective
interest method.
-- Bank loans which are initially recognised at fair value net
of any transaction costs directly attributable to the issue of the
instrument. 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.
-- 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 amortised over the remaining term of the
facility. 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 adjustment
through the income statement. The fair value of the instrument is
recognised on the statement of financial position with gains and
losses going 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
observability 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 on Page 8.
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.
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
2019 2018
GBP'000 GBP'000
Loss per share attributable to the
owners of the parent during the period
Loss for the period from continuing
operations (1,575) (1,935)
Profit/(loss) per share attributable
to the owners of the parent during
the period (1,575) (1,935)
-------------------------------------------- ----------- -----------
31 March 31 March
2019 2018
Number of shares
Weighted average number of ordinary shares
of the purposes of basic earnings per
share 15,346,950 15,346,950
Effect of dilutive potential ordinary
shares from share options 403,995 399,035
-------------------------------------------- ----------- -------------
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 15,750,945 15,745,985
4 Segmental reporting
Management have defined operating segments as those on which
results are considered by the Board. 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
PPCP UK PPCP Europe US Total
GBP'000 GBP'000 GBP'000 GBP'000
6 months ended
31 March 2019
Revenue 1,048 468 351 1,867
Cost of sales (28) (28) (69) (125)
------------------------ -------- -------------- -------- --------
Gross profit 1,020 440 282 1,742
------------------------ -------- -------------- -------- --------
Administrative expense (837) (794) (769) (2,400)
------------------------ -------- -------------- -------- --------
Loss before central
costs 183 (354) (487) (658)
------------------------ -------- -------------- -------- --------
Central costs (732)
Finance expense (185)
------------------------ -------- -------------- -------- --------
Loss before income
tax (1,575)
------------------------ -------- -------------- -------- --------
PPCP
PPCP UK PPCP Europe US Total
GBP'000 GBP'000 GBP'000 GBP'000
6 months ended
31 March 2018
Revenue 1,042 352 146 1,540
Cost of sales (21) (24) (30) (75)
------------------------------------ -------- -------------- -------- --------
Gross profit 1,021 328 116 1,465
------------------------------------ -------- -------------- -------- --------
Administrative expense (777) (893) (874) (2,544)
------------------------------------ -------- -------------- -------- --------
Profit/(loss) before central costs 244 (565) (758) (1,079)
------------------------------------ -------- -------------- -------- --------
Central costs (825)
Finance expense (31)
------------------------------------ -------- -------------- -------- --------
Loss before income tax (1,935)
------------------------------------ -------- -------------- -------- --------
5 Share capital
Ordinary shares Deferred shares Total
No GBP'000 No GBP'000 GBP'000
Shares 31 March 2018
(Ordinary 10 pence) 15,346,950 1,535 - - 1,535
------------- -------- ------ ---------- --------
Shares 30 September
2018 (Ordinary 10 pence) 15,346,950 1,535 - - 1,535
------------- -------- ------ ---------- --------
Shares 31 March 2019
(Ordinary 10 pence) 15,346,950 1,535 - - 1,535
============= ======== ====== ========== ========
6 Share-based payments - equity-settled share option schemes, LTIPs
On 13 February 2019 the 2017 underwater share options were
surrendered, and new options were granted. The share price was set
in accordance with the scheme rules at 46.17 pence. No options were
granted in the period ended 31 March 2018.
Options and warrants outstanding
6 months to 6 months to 12 months to
31 March 31 March 30 September
2019 2018 2018
No. No. No.
At beginning of period 399,035 399,035 399,035
------------------------------- ------------ ------------ --------------
Granted during period 139,517 - -
Exercised during the period - - -
Surrendered during the period (80,000) - -
Lapsed during the period (40,000) - -
------------ ------------ --------------
At end of period 418,552 399,035 399,035
------------------------------- ------------ ------------ --------------
Options exercisable
Number Weighted Latest exercise
of options average exercise date
price
At 31/03/2019 418,552 22.1p 12/02/2029
--------------- ------------ ------------------ ----------------
At 31/03/2018 399,035 71.8p 03/03/2027
--------------- ------------ ------------------ ----------------
At 30/09/2018 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 of GBPNil (2018: GBPNil)
in relation to share based payment.
7 Related party transactions
Ark Therapeutics Group plc changed its name to Premier
Veterinary Group plc in March 2015.
The Group operates the Ark Therapeutics Group plc Family Benefit
Trust ("FBT"). Amounts due from the FBT were GBPNil (31 March 2018:
GBPNil, 30 September 2018: GBPNil).
On 25 January 2019, the Company entered into a loan agreement
with Bybrook Finance Solutions Limited ("BFSL") whereby BFSL agreed
to provide a committed loan facility of GBP3.85m repayable by the
Group on or before 25 April 2019. The Company subsequently
exercised the right to extend the repayment date to 25 January 2021
by issuing warrants to BFSL to acquire 767,347 of ordinary GBP0.10
shares at par. The facility was used to repay the previous loan
notes issued and provided GBP2.0m of additional working capital
which was drawn down upon completion of the agreement. Crossroads
Finance Limited, a company jointly owned and controlled by Dominic
Tonner, Chief Executive Officer of PVG, and his spouse, has
participated in the funding by entering into direct arrangements
with BFSL. Rajan Uppal, a director of the Company, is the sole
shareholder and director of BFSL. At 31 March 2019, amounts owed to
BFSL were GBP3.85m (31 March 2018: GBPNil). Interest and
arrangement fees charged during the period were GBP185,312 (2018:
GBP30,750).
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 BLGDLXUDBGCR
(END) Dow Jones Newswires
June 28, 2019 02:00 ET (06:00 GMT)
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