TIDMPETS
RNS Number : 5512N
Pets At Home Group Plc
21 May 2020
FOR IMMEDIATE RELEASE, 21 MAY 2020
Pets at Home Group Plc: FY20 Preliminary Results
for the 52 week period to 26 March 2020
Exceptional Q4 demand delivers FY20 profit ahead of
expectations;
Focus on delivering a stronger pet care business in a
post-pandemic future
-- Group like-for-like(#) (LFL) revenue growth of 9.0%
o Total Group revenue exceeded GBP1bn for the first time, with
growth of 10.2% to GBP1,058.8m
o Retail LFL(#) revenue growth of 9.4%, or 15% on a 2-year basis
- Q4 LFL revenue growth of 15.9%
o Omnichannel revenue(#) growth of 27.8% or 83% on a 2-year
basis, reflecting previous investment in capacity and
fulfilment
o Vet Group LFL(#) revenue growth of 5.6%, with LFL customer
sales(#) growth across all First Opinion practices of 13.5%, and
Joint Venture practices at 13.2%
-- Growth in Group underlying PBT(#) of 11.0% to GBP99.5m on a
pre-IFRS16 basis, and Group underlying free cashflow(#) of 40.7% to
GBP89.6m
-- Underlying basic earnings per share, excluding the impact of
IFRS16, were 16.0 pence (#) (FY19: 14.1 pence)
-- Resilient balance sheet with significant headroom on debt capacity and covenants
o Net debt of GBP85.9m, with net debt/EBITDA of 0.6x vs leverage
covenant of 3.25x; on a post IFRS16 basis, net debt of GBP549.8m
with net debt/EBITDA of 2.5x
o Total liquidity, comprising cash balances and undrawn portion
of GBP248m RCF (maturity 2023), of approximately GBP162m; an
additional GBP100m facility agreed post year end
o Final dividend per share of 5.0p, reflecting our strong
performance in FY20 and robust liquidity and balance sheet, giving
a total of 7.5p for FY20, equal with the prior year
-- Ongoing expansion of our pet care ecosystem:
o Number of VIPs who purchase both products and a service grew
24% year-on-year, representing c16% of all 5.6m active members
o Number of subscription customers across the Group is now over
865,000, up 23% YoY
o Circa 20% of the UK puppy population signed up to VIP Puppy
Club, typically spending 23% more than non-members across the
Group
# Alternative Performance Measures (APMs) are defined and
reconciled to IFRS information, where possible, on page 96.
All FY20 APMs exclude the impact of IFRS16 unless explicitly
stated.
Peter Pritchard, Group Chief Executive Officer:
In normal circumstances, it would have given me great pleasure
to reflect on another year in which we have grown sales and profits
and successfully executed our proven pet care strategy. These are,
however, far from normal circumstances with the rapid, wide-ranging
and devastating effects of COVID-19 having an unprecedented impact
on all of our lives.
Response to COVID-19
In response to this crisis, our planning and actions have
focused on preparing the business for five distinct phases pre and
post lockdown, remaining mindful of the need within each phase to
ensure readiness for both the next stage and potential reversion to
the previous one. We discuss each of these phases and our related
assumptions in subsequent sections of this report.
Our immediate priorities were to ensure the wellbeing and safety
of our colleagues, vet Partners, customers, suppliers and pets, and
to support our most vulnerable colleagues and communities. In line
with Government advice, we rapidly implemented a number of
protocols in this respect, which enabled us to provide safe
continuity of customer service, as a designated "essential
retailer", across our Retail and Veterinary operations. We were
also pleased to provide support to colleagues and communities that
need us through GBP1.1m of funding to nominated pet charities, a
GBP1m Hardship Fund for colleagues and their families, and
discounts to NHS workers as they cared for the nation's health.
In light of uncertainty around the duration of lockdown,
disciplined management of cash and prudent allocation of capital
became increasingly important. In addition to welcoming certain
Government-led initiatives, we implemented specific measures
internally to preserve near-term cash flow, including, but not
limited to, deferring capital and marketing spend and agreeing a
temporary 20% reduction in remuneration across our Executive
Management Team, Non-Executive Directors and senior leadership
team. At the same time we have taken the decision across our
business not to participate in the government's Job Retention
Scheme (JRS). We continue to review the position regarding a small
proportion of those colleagues for whom a prolonged period of
shielding may be necessary - predominantly those who are either
highly or extremely vulnerable or are carers - and, dependent upon
government guidance, may participate in the JRS for these
colleagues in future. Across our Vet Group, our Joint Venture
Partners operate independent businesses and are solely responsible
for the decisions made in respect of their colleagues, and a number
of our Joint Venture Partners have chosen to participate in the
JRS.
Current trading
As anticipated in our full-year trading update on 2 April,
nearly all of the exceptional demand witnessed in the closing weeks
of Q4 has unwound during Q1 of the current year which, combined
with our adherence to guidelines on social distancing across our
operations and restrictions on the sale of pet products and health
care services deemed non-essential, has temporarily depressed
normal levels of Group turnover.
http://www.rns-pdf.londonstockexchange.com/rns/5512N_1-2020-5-20.pdf
While online sales have remained at materially elevated levels,
matched by improved capacity and good product availability, they
are, in isolation, unable to mitigate the reduced level of in-store
sales, and their weighting towards food, together with an
additional GBP5m of costs relating to our initial response to
COVID-19, has had an adverse effect on profits, margins and
cashflow in the financial year to date.
Accordingly, we anticipate H1 FY21 Group pre-tax profit,
including both the one-off benefit from the business rates holiday,
which will be utilised to partially mitigate the estimated
financial impact of COVID-19 this year, as well as additional
operating costs related to social distancing, to be materially
below the prior year. It remains difficult to make a clear
assessment of how consumers will react as we emerge from lockdown
and we, therefore, do not feel it is prudent to provide full-year
guidance at this stage. We will, however, reassess this at our Q1
update at the end of July.
Looking ahead
Over and above managing the business through the pandemic, we
must endeavour to continue creating value for our shareholders by
being well-placed for a recovery in demand.
Early indications are that some of the behaviours that consumers
have displayed during lockdown, notably social distancing and the
preference to purchase goods and services safely and conveniently,
may persist post exit. Preparing for this has meant adapting our
working practices, introducing further precautionary measures
around customer interaction, and implementing new ways of safely
delivering products and services across all channels, all the while
retaining discipline over cash utilisation, thereby maintaining a
resilient balance sheet and low financial gearing.
The current environment lacks precedence in the UK and it is
difficult, therefore, to assess the medium to long term effect it
will have on consumer behaviour or when we might see normalisation
in shopping habits. This crisis has, however, encouraged us to
critique our business model and how we operate. While some things
have changed, and will continue to do so in a post-pandemic world,
we remain confident in the long-term sustainability of our business
for a number of reasons, not least our sustainable retail and
owner-managed veterinary models, our growing multichannel platform,
our large and expanding loyal customer base and our unique
solutions-based pet ecosystem.
We operate in a large, growing market with favourable
demographics and clear, long-term demand drivers. While the current
crisis is affecting consumer behaviour across the UK, our pet
population is unchanged, pets remain an important part of our lives
- possibly even more so as a result of our present circumstances -
and still need to be fed, loved and cared for.
These are clearly unprecedented times and Pets at Home will not
be immune to the challenges that we collectively face. We have had
to respond quickly and make significant changes to the way we
operate our business, and will undoubtedly need to remain focused
yet agile as we respond to pandemic-driven issues and opportunities
alike. I am proud to be surrounded by an experienced and adaptable
management team who, with the support of our fantastic colleagues
who have continued to work tirelessly in adverse circumstances,
providing essential products and healthcare services for the
nation's pets, are determined to create a stronger pet care
business in a post-pandemic future.
Results webcast
An audio webcast and presentation of these results will be
available on our website (
https://investors.petsathome.com/investors/ ) from 07.00am on 21
May 2020. Management will host a Q&A conference call for
analysts and investors at 09.30am. Those wishing to participate
should register their interest with Clinton Manning or Freddie
Bendit at MaitlandAMO by emailing
PetsAtHome-Maitland@maitland.co.uk
Investor Relations Enquiries
Pets at Home Group Plc:
Roger Tejwani, Director of Investor Relations & External
Communications
+44 (0)1279 927022
Jonny Armstrong, Head of Investor Relations
+44 (0)797 5593237
Media Enquiries
Pets at Home Group Plc:
Gillian Hammond, Head of Media & Public Affairs
+44 (0)7442 500138
MaitlandAMO:
Clinton Manning
+44 (0)7711 972662
Freddie Bendit
+44 (0) 7557 833442
About Pets at Home
Pets at Home Group Plc is the UK's leading pet care business;
our commitment is to make sure pets and their owners get the very
best advice, products and care. Pet products are available online
or from our 453 stores, many of which also have vet practices and
grooming salons. Pets at Home also operates a UK leading small
animal veterinary business, with 441 First Opinion practices
located both in our stores and in standalone locations, as well as
four Specialist Referral centres. For more information visit:
http://investors.petsathome.com/
Disclaimer
This statement of preliminary results does not constitute an
invitation to underwrite, subscribe for, or otherwise acquire or
dispose of any Pets at Home Group Plc shares or other securities
nor should it form the basis of or be relied on in connection with
any contract or commitment whatsoever. It does not constitute a
recommendation regarding any securities. Past performance,
including the price at which the Company's securities have been
bought or sold in the past, is no guide to future performance and
persons needing advice should consult an independent financial
adviser. Certain statements in this statement of preliminary
results constitute forward-looking statements. Any statement in
this document that is not a statement of historical fact including,
without limitation, those regarding the Company's future plans and
expectations, operations, financial performance, financial
condition and business is a forward-looking statement. Such
forward-looking statements are subject to risks and uncertainties
that may cause actual results to differ materially. These risks and
uncertainties include, among other factors, changing economic,
financial, business or other market conditions. These and other
factors could adversely affect the outcome and financial effects of
the plans and events described in this statement. As a result you
are cautioned not to place reliance on such forward-looking
statements. Nothing in this statement should be construed as a
profit forecast.
Chairman's Review
The Group ended the year in good shape, with a strong financial
performance reflecting some early gains from our strategy to bring
our retail and veterinary businesses closer together and become the
best pet care business in the world. Our Retail business delivered
sustained revenue, profit and free cashflow growth in the year,
while our First Opinion veterinary business completed its planned
recalibration, positioning it well for future growth. Together,
with the benefit of further investment in data infrastructure and
capabilities undertaken during the year, both businesses are now
well-placed to deliver a best-in-class suite of products and
services for customers across our pet care ecosystem, thereby
setting us apart from our competitors.
As we approached the end of the financial year, our focus and
attention turned to the far-reaching and devastating effects of
COVID-19. Our Executive Management Team responded to the immediate
challenges quickly and decisively, implementing protocols to
safeguard the wellbeing and safety of colleagues, vet Partners and
customers. These actions enabled the safe continuity of customer
service across our Retail and Veterinary operations. We were also
pleased to provide GBP1.1m of funding to nominated pet charities
and discounts to NHS workers as they cared for the nation's health.
The actions taken have had the full support and appreciation of the
Board, and I would like to thank each member of the management team
for their resilience and adaptability as we navigate the business
through these unprecedented times.
Our people remain the foundation of our business and, during
this crisis, we ensured that those colleagues in self-isolation
received full pay. We were also pleased to create a Hardship Fund
of GBP1.0m for colleagues, our vet Partners and their teams should
their families experience financial difficulties. This year, more
than ever, I would like to thank all our colleagues for their
dedication and commitment, not least over the past three months
when, throughout the entire business, they have worked tirelessly
and with good humour in adverse circumstances to best serve our
customers' needs.
Amidst this period of uncertainty, three things have become
increasingly clear to me. First is that Pets at Home, like most
businesses across all sectors of the economy, will not be immune to
the challenges faced from COVID-19. Second is that in times of
extreme difficulty, strong management teams build stronger
businesses, and I have every confidence that our current management
has the requisite skill and energy to ensure that Pets at Home can
emerge a stronger business in a post-pandemic world. Finally, it
remains clear that through good times and bad times, the UK is and
will remain a nation of pet lovers. The resilience and growth of
the UK pet market, coupled with our strong leadership team and
adaptable pet care strategy, means that I hand over my role as
Chairman to Ian Burke confident in the long term sustainability of
our business.
Tony DeNunzio
Non-Executive Chairman
21 May 2020
Chief Executive Officer's Review
COVID-19
Most, if not all of us, have no prior experience of dealing with
a pandemic, despite it having wide-ranging consequences on all of
our daily lives. We have had to respond quickly, making significant
changes to the way we operate our business, and will undoubtedly
need to remain focused, disciplined and agile over the coming
months.
Broadly speaking, in response to this crisis, our planning and
actions have focused on preparing the business for five distinct
phases, remaining mindful of the need within each phase to ensure
readiness for both the next phase and potential reversion to the
previous one. We have categorised these five phases as follows:
I. Pre-lockdown
II. Lockdown
III. Preparing to emerge
IV. Post lockdown
V. A new normal
I. Pre-lockdown
When the pandemic first appeared in China, we assumed that the
main threat was to our supply chain. We engaged quickly and
effectively with our Far East suppliers and colleagues to ensure
continuity of supply and, as a result, were able to meet
exceptional levels of pulled forward demand in the closing weeks of
the financial year, both in-store and online, as existing customers
increased average basket size ahead of an anticipated lockdown. We
also experienced a higher than usual number of new customers
shopping across our pet ecosystem, particularly consumables such as
pet food and litter as supermarket availability declined, and
healthcare services as veterinary peers closed practices. During
this period, we were ranked #1 by market share of grocery dog food
as consumers turned to our trusted brands and advice.
As the virus started to spread beyond Chinese borders, however,
it soon became clear that the risk to demand would be a far greater
challenge. Our planning moved to ensuring the wellbeing and safety
of our colleagues, vet Partners, customers, suppliers and pets; the
safe continuity of customer service across our operations; support
for our most vulnerable colleagues and communities; and increased
vigilance over cash preservation and allocation of capital.
II. Lockdown
Recognising the need to continue providing the nation's pets
with food products and healthcare services, the UK government
deemed Pets at Home an "essential retailer". At the same time,
clear public guidance was issued on COVID-19 preventative measures
and social distancing.
In seeking to strike a balance between providing those essential
products and services alongside safeguarding the health and
wellbeing of our stakeholders, we implemented a number of protocols
across our Retail and Veterinary operations and provided clear
advice and support to our vulnerable colleagues and the communities
that rely on us. In view of uncertainty around the duration of
lockdown, we also implemented specific measures internally to
preserve near-term cash flow.
Retail
Across our stores, we introduced temporary purchase limits,
restricted the number and type of products available for sale,
removed pets on sale and closed all our Groom Room salons to
discourage non-essential customer visits. We implemented all
Government advice regarding social distancing by limiting the
number of customers allowed in our stores at any one time and
introducing a clear queuing protocol for customers both inside and
outside of our stores. We also introduced sneeze guards and
contactless only payment across all of our points of sale.
Across our two Distribution Centres, we increased the number of
shifts and changed shift start times to reduce the number of
colleagues on any one shift. We introduced social distancing
measures into our centres and recruited around 250 temporary
workers to ensure safe continuity of operations during a period of
heightened online demand. The measures we implemented to protect
our Support Office colleagues included removing all but essential
travel and the adoption of alternative working arrangements.
Vet Group
While nearly all of our First Opinion veterinary practices, and
all of our Specialist Referral centres, have remained open, albeit
on reduced hours, we have strictly adhered to Government guidelines
on social distancing and RCVS guidance on permitted procedures,
which initially excluded elective and routine work broadly
equivalent to half the services offered across our practices. In
recent weeks, in line with updated RCVS guidance widening the range
of permitted procedures, we have seen a positive response from
customers and a partial recovery in practice revenues. We remain in
close contact with all of our Joint Venture Partners, to assist
them in navigating the current crisis, and have ensured that they
are beneficiaries of any relevant Group-wide reliefs relating to
COVID-19.
Colleagues and communities
We recognised that being an essential retailer comes with a
responsibility to ensure that we can serve all of our pet owner
customers through these uncertain times. In support of our truly
heroic National Health Service we dedicated the first hour of
trading on Tuesdays, Thursdays and Saturdays exclusively to NHS
workers. Outside of these hours, across our stores, we implemented
a fast track entrance, a dedicated checkout lane and a 10% discount
scheme off their shopping and vet costs. We also recognised that
vulnerable groups needed specific help and, therefore, opened all
our stores exclusively on Mondays, Wednesdays and Fridays between
08.00am and 09.00am to enable our more vulnerable customers to shop
in comfort and safety.
The crisis is also having a devastating effect on pet charities
with many seeing their fundraising diminish while not being able to
rehome pets. These charities need our support more than ever, and
in recent weeks we allocated GBP1.1m to specific charities,
comprising GBP0.4m of emergency grants from our charity, Support
Adoption for Pets, and GBP0.7m of funding thanks to our VIP loyalty
programme.
Caring for our hardworking colleagues has never been more
important and we ensured that those colleagues who needed to
self-isolate for several weeks continued to receive full pay. We
also created a Colleague Hardship Fund of GBP1.0m for colleagues,
our vet Partners and their teams should their families experience
financial difficulties, and, outside of our normal bonus cycle,
paid an additional GBP1.9m bonus primarily to store and other
frontline colleagues in April in recognition of their tireless work
in adverse circumstances.
Cash preservation and allocation of capital
Our strong performance during FY20 meant that we entered the new
financial year with a resilient balance sheet, low financial
leverage, significant headroom on our banking covenants, and total
liquidity including cash balances of approximately GBP162m.
As anticipated, nearly all of the exceptional demand witnessed
in the closing weeks of Q4 has unwound during Q1 of the current
year which, combined with our adherence to guidelines on social
distancing across our operations and restrictions on the sale of
pet products and health care services deemed non-essential, has
temporarily depressed normal levels of Group turnover. While online
sales have remained at materially elevated levels, matched by
improved capacity and good product availability, they are, in
isolation, unable to mitigate the reduced level of in-store sales,
and their weighting towards food, together with an additional GBP5m
of costs relating to our initial response to COVID-19, has had an
adverse effect on profits, margins and cashflow in the financial
year to date.
We welcomed the government's business rates relief, providing us
with approximately GBP33m for FY21, to partially mitigate the
estimated financial impact of COVID-19 this year, as well as
specific measures regarding the payment of VAT. At the same time we
have taken the decision across our business not to participate in
the government's Job Retention Scheme (JRS). We continue to review
the position regarding a small proportion of those colleagues for
whom a prolonged period of shielding may be necessary -
predominantly those who are either highly or extremely vulnerable
or are carers - and, dependent upon government guidance, may
participate in the JRS for these colleagues in future. Across our
Vet Group, our Joint Venture Partners operate independent
businesses and are solely responsible for the decisions made in
respect of their colleagues, and a number of our Joint Venture
Partners have chosen to participate in the JRS.
We also implemented measures internally to preserve near-term
cash flow, including, but not limited to, moving to monthly payment
of store rents, deferring capital and marketing spend, agreeing a
six-month loan repayment holiday with our Vet Group banking
partners for all Joint Venture Partners who are not currently debt
free, and passing a portion of any rent and rates benefit on to
those practices situated in-store. We also ensured that all of our
suppliers were paid in full on time.
In view of uncertainty over the duration of lockdown, we
arranged a new credit facility of GBP100m with support from our
banking syndicate, to provide sufficient liquidity for the
foreseeable future, and our Executive Management Team,
Non-Executive Directors and senior leadership team voluntarily
implemented a temporary 20% reduction in salary.
III. Preparing to emerge
It remains difficult to make precise judgements about how
consumers will react as we emerge from lockdown. Over and above
managing the business through the pandemic, however, we must
endeavour to continue creating value for our shareholders by being
well-placed for a recovery in demand.
Importantly, all of our stores and nearly all our First Opinion
practices have remained open through the crisis, providing some
insight into likely future trends. Early indications are that some
of the shopping habits that consumers have displayed during
lockdown, notably social distancing, channel shift and the
preference to purchase goods and services safely and conveniently,
may persist post lockdown, thereby impacting the volume of
customers we can serve in-store.
Preparing for this has meant adapting our working practices and
learning new ways to serve our customers across all channels, all
the while remaining vigilant across our funding requirements,
ongoing measures for cash preservation and prudent allocation of
capital.
Retail
Our stores remain open and can respond quickly to changes in
footfall. We maintain good availability across all of our product
lines, branded and private label, and have extended the number of
items we can sell across our full range of consumable and
discretionary products.
We have introduced further precautionary measures to enhance
safe interaction with our customers, including the provision of
protective masks for all our store colleagues, and implemented
training for specific colleagues on the safe delivery of grooming
services and contactless sale of pets.
Recognising that we may need to maintain some form of social
distancing post lockdown, we have successfully piloted a "Call and
Deliver-to-Car" service, increased the contactless payment limit
from GBP30 to GBP45, and made it easier for existing and new
customers to sign up to our subscription services online as opposed
to in-store. Importantly, the vast majority of our stores are
situated on retail parks and, with an average trading space of
approximately 6,400 sq ft., are more adaptable to social distancing
than smaller, high street formats.
Our previous investment in automation, fulfilment and digital
capability has given us capacity to process double the pre-COVID-19
level of online orders, both across our UK-wide network of stores,
which can be leveraged to meet omni-channel demand, and delivery
direct to home. Mindful of the prevailing channel shift to online,
which we expect COVID-19 to accelerate, we have been assessing
options across our logistics network to ensure that we have a
well-invested, fit-for-purpose platform that is capable of managing
future growth and driving efficiency benefits.
Vet Group
Across our First Opinion practices, we have implemented training
for our vet colleagues to ensure the safe delivery of non-urgent
procedures, vaccinations and health checks. Healthcare subscription
products, such as Flea and Worm treatments, can now be delivered
direct to home, as well as collected in-practice, and we have
accelerated plans to enable remote contact and the performance of
remote consults between our Joint Venture Partners and their
veterinary customers through an arrangement with "Vet Help
Direct".
IV. Post lockdown
It is challenging to forecast the level and shape of demand post
lockdown. The speed of the economic downturn has been
unprecedented, making comparisons on demand recovery with periods
like the global financial crisis unhelpful, in our view. Moreover,
while the duration of the recovery will in part depend on a number
of variables that we can interpret over time, including levels of
employment and consumer confidence, we cannot accurately predict
how consumers will react and interact until either herd immunity is
achieved or a vaccine has been developed.
While some market commentators have noted the rebound of
economic activity in China, extrapolating China's experience into
the outlook for developed markets is also unhelpful, in our view,
given China's faster and more stringent virus containment measures
and its predominance of manufacturing relative to our more
consumer-facing services based economy.
We can, however, attempt to provide some sufficiently broad and
caveated assumptions on what post lockdown demand might look like
across the different areas of our business.
Retail
We expect food demand to remain inelastic given pets need to be
fed through all economic cycles. It is, however, possible that
consumers' purchasing intent may change during lockdown,
potentially switching brands based on either availability, unit
size or pricing, and we continue to offer a market leading range of
branded and own label products across all price points, both
in-store and online.
While accessories undoubtedly have greater demand elasticity,
they comprise approximately one third of our retail sales,
excluding cat litter and bedding. We have, in recent weeks,
restored the full range of accessories on offer in-store, ahead of
a potential increase in the attachment rate post lockdown
reflecting pent up demand, higher capacity for discretionary spend
across specific demographics, and the possibility that lockdown may
have accelerated the perception of pets as a key part of the
family.
We closed all of our Groom Room salons during lockdown,
reflecting Government guidance on social distancing. Subject to
consumers' attitude towards social distancing post lockdown, we
anticipate a relatively quick resumption of grooming visits, given
the procedures we have implemented for safe delivery of the
service, a "feel good factor" post lockdown which could extend to
pets, and an increasing awareness of the health benefits for pets.
Prior to lockdown, grooming and pet sale revenues in FY20 averaged
GBP3.3m per four-weekly period and we do, therefore, anticipate a
period of recovery in building to historic levels.
Vet Group
Across our First Opinion practices, we have already seen a
positive customer response to the adaptation of RCVS guidelines
around permitted procedures, and would expect any further
relaxation of guidelines to have a stimulatory effect on this
economically-insensitive part of our business. We do, however,
anticipate that it will take time post lockdown for our practices
to reach normal levels of activity, with aggregate 4-weekly
revenues averaging GBP27.0m for the first 48 weeks of FY20 prior to
restrictions being imposed. Nevertheless, with practice
recalibration now complete, third party debt and business rate
payment holidays in effect, and the clear benefits of our unique
owner-managed model still in place, our Vet Group is
well-positioned for a recovery.
Mindful of prevailing circumstances, we recognise the potential
need to support some of our First Opinion JV practices with
additional operating loan funding during the year ahead. Such
funding will be available for those businesses that remain viable
over the longer term, taking into account the near-term benefit of
the third party loan repayment holiday.
V. A new normal
There is no precedent of similar pandemics in the UK, making it
difficult, therefore, to assess the medium to long term effect on
consumer behaviour or when we might see normalisation in shopping
habits. This crisis has, however, encouraged us to critique our
business model and how we operate. While some things have changed,
and will continue to do so in a post-pandemic world, we remain
confident in the long-term sustainability of our business for a
number of reasons:
Favourable market dynamics
We operate in a large, growing market with favourable
demographics and clear, long-term demand drivers. Pets remain an
important part of our lives - possibly even more so as a result of
our present circumstances - and still need to be fed, loved and
cared for. We believe that we can continue to take share of this
market over the longer term given the significant headroom in core
areas such as nutrition, veterinary services and food and
healthcare subscriptions, as well as an increasing willingness
among consumers to spend on convenience.
A sustainable retail offering
In Retail, the majority of our inventory is small-ticket,
non-seasonal and non-discretionary, and sourced across relatively
short supply chains. Our nationwide store estate brings scale
advantages, and the combination of our wide range of retail
products and price points, as well as our service offering,
positions us well across all demand cycles and against all manner
of competition. The overwhelming majority of our stores are
structurally profitable, and our longer term programme of
conversion to new pet care formats, with a greater space weighting
towards services, will help in moving the customer relationship
from transactional to experiential, resulting in a more rewarding
and convenient customer journey.
A scalable multichannel business
We have a growing multichannel business, which allows customers
to shop with us however they choose. Our recent investment in
automation and fulfilment has given us the capacity to process a
significantly higher volume of online sales than in prior years.
This brings a number of opportunities, not least around
subscription services where we see considerable scope for
expansion. Unlike many multichannel retailers, our unique
solutions-based customer proposition allows us, in normal cycles,
to grow all channels to market, simultaneously and profitably.
A large and growing loyal customer base
We have a large and growing base of 5.6m VIP customers, many of
whom already shop across our ecosystem of products, services and
trusted advice. We have invested considerably over the past year in
our data and analytics capability to drive customer insights that
will enable us to offer more personalised, curated and rewarding
solutions, both online and in-store, thereby deepening our customer
relationships and increasing customer lifetime value. The benefits
of this remain ahead of us over the longer term.
A scalable position in a growing veterinary market
Across our First Opinion veterinary business, the recalibration
of viable and closure of specific non- viable practices has been
completed. Our First Opinion practices benefit from a unique
owner-manager structure and typically achieve industry leading
operating metrics. Approximately, two thirds of practices are
located in-store, and can benefit from retail referrals, and
approximately one third of all practices have been in existence for
four years or less, with practice maturity representing a
significant future cash flow opportunity.
Attractive financial dynamics
Across normal cycles, our operations generate stable margins and
good cash flow returns, and we have a growing stream of predictable
annuity income. Our balance sheet is resilient, our leverage is low
and we have various levers we can utilise, if required, to further
control costs and conserve cash within the business. Over 50% of
our store estate, for example, is scheduled to enter lease renewal
negotiations over the next five years. Where rent reductions have
historically been achieved with landlords, these have typically
averaged 23%, even in a more benign rental environment.
Doing good as part of our purpose
We have raised over GBP5m for charities across our charitable
foundation Support Adoption for Pets and our VIP loyalty programme.
We have continued to reduce our environmental impact during our
phase of growth through, for example, lowering our carbon
footprint, using 100% renewable electricity, and recycling our pet
bedding, cardboard and plastic waste.
These are clearly unprecedented times and Pets at Home will not
be immune to the challenges that we collectively face. We have had
to respond quickly and make significant changes to the way we
operate our business, and will undoubtedly need to remain focused
yet agile as we respond to pandemic-driven issues and opportunities
alike. I am proud to be surrounded by an experienced and adaptable
management team, who with the support of our fantastic colleagues
and customers, are determined to create a stronger pet care
business in a post-pandemic future.
Strategic review of FY20
We are uniquely positioned in the GBP6.5bn UK pet care market,
which continued to demonstrate resilience and growth in 2019. We
estimate that the overall size of the market increased by c4%, with
the retail segment growing at c3% and the veterinary segment at
c5%. With the population of cats and dogs in the UK remaining
broadly stable at c18million, this growth has been predominantly
driven by continued humanisation and premiumisation - highlighting
that pets are very much regarded as "one of the family".
Our pet care strategy delivered market share gains across all
key areas, across our core product categories of food and
accessories (both online and offline) as well as our services
offering, which extends from the provision of pet grooming and
First Opinion veterinary visits to our Specialist Referral
centres.
Key Performance Indicators
YoY
Financial KPIs(1) FY20 FY19 change
-------------------------- --------------------------------- --------- --------- --------
Customer sales(#, 2) (GBPm) 1,334.7 1,218.2 9.6%
------------------------------------------------------------- --------- --------- --------
Group underlying PBT (excluding IFRS16)(#)
(GBPm) 99.5 89.7 11.0%
------------------------------------------------------------- --------- --------- --------
Group underlying free cashflow(#) (GBPm) 89.6 63.6 40.7%
------------------------------------------------------------- --------- --------- --------
YoY
Strategic KPIs Measure FY20 FY19 change
-------------------------- --------------------------------- --------- --------- --------
Bring the pet experience No. of customer transactions(3)
to life (m) 63.1 59.2 6.6%
-------------------------- --------------------------------- --------- --------- --------
50% of sales from pet Customer sales(#, 2)
care services from services 34.1% 34.0% 9 bps
-------------------------- --------------------------------- --------- --------- --------
Use our data to better VIP customer sales(#,
serve customers 2, 4) (GBPm) 817.2 591.6 38.1%
-------------------------- --------------------------------- --------- --------- --------
Set our people free Customer sales(#, 2)
to serve per colleague (GBPk) 187.0 174.1 7.4%
-------------------------- --------------------------------- --------- --------- --------
1. Financial KPIs shown above represent those used by the
business to monitor performance. Management recognise that as
Alternative Performance Measures they differ to statutory metrics,
but believe they represent the most appropriate KPIs.
2. Customer sales include gross customer sales made by Joint
Venture vet practices of GBP329.7m (FY19: GBP309.8m) (unaudited
figures), and therefore differs to the fee income recognised within
Vet Group revenue
3. Includes customer transactions in-store, online, in First
Opinion vet practices, cases treated in Specialist Referral centres
plus pets groomed in Groom Room salons
4. VIP customer sales are shown on a rolling 12 month basis and
include gross spend at First Opinion vet practices
Strategic pillar: Bring the pet experience to life
We had another strong year in Retail, manifested in a 2-year LFL
growth rate of 15%. This performance reflects the success of
maintaining our competitive price position, investing in our
omnichannel proposition and focussing on new customer acquisition
in our Puppy and Kitten Club.
The rollout of a further 16 pet care centre formats during the
year, bringing the total to 18 so far, is a good example of how we
"bring the pet experience to life". These centres create a
destination for pet owners and pets alike, with dedicated multi-use
event space, greater space allocated to pet care services, wider
ranges of own brand Advanced Nutrition products and an emphasis on
immersive, digital experiences.
While our focus for the immediate future will be on ensuring we
are well-placed for a recovery in demand, we will continue to
evolve the way in which we serve customers over the longer term, to
continue winning market share.
Strategic pillar: Deliver 50% of sales from pet care
services
During FY20 34.1% of customer sales came from pet care
services(1) . By providing a variety of services to our customers,
we are able to cater for their pet care needs in ways that the
majority of our competitors cannot.
The greatest contributor by far was customer sales through First
Opinion veterinary practices, which grew 10.4% despite ending the
year with 29 fewer practices, largely due to our planned programme
to buy out, or in some cases close, specific Joint Venture (JV)
practices. Like-for-like customer sales delivered by our JV
practices increased 13.2%, reflecting two key drivers: the
immaturity of the estate (with 31% of all practices four years old
or less) and the value of our unique JV model in incentivising
practice growth, even when it reaches maturity.
I am particularly pleased at the way in which we delivered the
recalibration of our First Opinion veterinary business over the
past 18 months. The decision to buy out 57 JV practices, and
subsequently close 36 of them, was made in the best interests of
all the Partners involved and the longer term health of the Group.
The fee adjustments we have implemented across the remaining JV
estate throughout FY20 should allow those practices to mature more
swiftly, therefore improving practice cashflow.
The underlying performance of our First Opinion estate improved
in FY20. We have fewer loss-making practices, more debt-free
practices, and the combined profit of the estate increased
significantly. This gives us confidence that our actions will help
to release free cashflow as existing practices mature.
Performance across our Specialist Referral centres matched
growth in the underlying market, which is the fastest growing
segment of pet healthcare. Our capacity extension at Dick White
Referrals in Cambridge is advancing, and we remain on track to open
our first greenfield site in Scotland later this calendar year.
These investments, in an attractive adjacent market to our First
Opinion practices, will enable us to provide specialist treatment
to even more of the nation's pets in future years.
Our various subscription services represent another key element
of our offering, across which we now provide products or services
to over 865,000 customers. Our monthly Flea & Worm service was
successfully extended to cat wormers during the year, and
subscribers to our flagship veterinary healthcare plan 'Complete
Care' grew significantly in the period, while considerable headroom
for longer term growth remains.
(1) including gross customer sales made by Joint Venture vet
practices, revenue from our Specialist Referral centres and company
managed vet practices, grooming services, subscriptions, pet sales
and pet insurance commissions
Strategic pillar: Use our data to better serve customers
We ended the year with a record 5.6m active VIP loyalty club
members comprising 75% of all store revenue. We have seen notable
success in new customer acquisition, where new pet owners can
benefit from membership of our Puppy and Kitten Clubs. By making
the customer central to all aspects of our pet care ecosystem,
supported by a structured and highly-engaging CRM experience, we
have been able to increase spend per Puppy and Kitten Club member
by up to 23%, improving the lifetime value of our customers.
A key focus over the past year has been migrating the day-to-day
management and analytics of our VIP database in-house, whilst
building a team of data scientists and the necessary infrastructure
to optimise its output. While the financial results delivered in
FY20 were largely achieved without any benefits flowing from this
investment, we are increasingly well-placed to increase our share
of VIP customer wallet in future years.
Strategic pillar: Set our people free to serve
Across our Retail estate, we reduced colleague hours by 3%
year-on year, whilst delivering strong like-for-like sales growth
and higher customer satisfaction scores. These savings were
achieved by reducing non-customer facing tasks, thereby affording
colleagues more time to share their expertise with customers.
We recently invested almost GBP5m in automation at our
Northampton Distribution Centre to support the continued growth in
omnichannel retailing, in particular across our subscription
platform. This investment in capacity and efficiency enabled us to
meet exceptional levels of demand in Q4 of FY20, as customers
brought forward purchases and shopped more frequently online.
We remain focussed on providing greater operational support
across our First Opinion veterinary practices, recognising that
each practice is unique. This has been particularly important
during the uncertainty related to COVID-19, and our unwavering
support will remain well beyond these challenging times.
Finally, in recognition of all our colleagues' commitment and
determination through the recent crisis, we paid an additional
colleague bonus amounting to GBP1.9m. I remain extremely grateful
for their continued support.
Peter Pritchard
Group Chief Executive Officer
21 May 2020
Chief Financial Officer's Review
The FY20 audited period represents the 52 weeks from 29 March
2019 to 26 March 2020. The comparative period represents the 52
weeks from 30 March 2018 to 28 March 2019.
The Group's results are shown as two segments that represent the
size of the respective businesses and our internal reporting
structures: Retail (includes products purchased online and
in-store, pet sales, grooming services and insurance products) and
Vet Group (includes First Opinion practices and Specialist Referral
centres).
The financial statements for FY20 have been prepared under the
requirements of IFRS16 for the first time. To aid comparability
with the prior period, adjusted financial information shown pre the
impact of IFRS16 is also shown in the table below. The impact of
IFRS16 on the Group financial statements has been to reduce Group
underlying profit before tax by GBP6.0m, and is shown in further
detail on page 19.
FY20 FY20 FY19 YoY change
(pre IFRS16)
(post (pre IFRS16) (pre IFRS16)
IFRS16)
Group like-for-like revenue
growth(#) 9.0% 9.0% 5.7%
Retail 9.4% 9.4% 5.1%
Vet Group 5.6% 5.6% 11.2%
Group revenue (GBPm) 1,058.8 1,058.8 961.0 10.2%
------------------------------------- ---------- -------------- -------------- --------------
Retail 937.6 937.6 854.6 9.7%
-------------- -------------- --------------
Vet Group 121.2 121.2 106.4 13.9%
-------------- -------------- --------------
(174)
Group underlying gross margin(1) 48.9% 48.9% 50.7% bps
--------------
(127)
Retail 49.7% 49.7% 51.0% bps
--------------
(531)
Vet Group(1) 42.7% 42.7% 48.0% bps
==============
Group underlying EBIT(2,3,#)
(GBPm) 111.3 103.3 93.2 10.9%
Retail 89.3 81.7 67.2 21.6%
Vet Group(2) 30.6 30.2 32.1 (5.9)%
------------------------------------- ---------- -------------- -------------- --------------
Central (8.6) (8.6) (6.1) 41.1%
------------------------------------- ---------- -------------- -------------- --------------
Group underlying EBIT margin(2,3,#) 10.5% 9.8% 9.7% 6 bps
------------------------------------- ---------- -------------- -------------- --------------
Retail 9.5% 8.7% 7.9% 85 bps
------------------------------------- ---------- -------------- -------------- --------------
(526)
Vet Group(2) 25.2% 24.9% 30.1% bps
==============
Group underlying PBT(3,#)
(GBPm) 93.5 99.5 89.7 11.0%
--------------
Group statutory PBT(3) (GBPm) 85.9 91.9 49.6 85.4%
--------------
Underlying basic EPS(1,2,3,#)
(p) 15.0 16.0 14.1 13.3%
--------------
Statutory basic EPS(3) (p) 13.5 14.4 6.1 136.8%
--------------
Group non-underlying charges(1,2)
(GBPm) (7.6) (7.6) (40.1) (81.1)%
-------------- -------------- --------------
Group non-underlying cash
costs(4) (GBPm) (16.4) (16.4) (8.9) 83.6%
-------------- -------------- --------------
Group underlying free cashflow(#)
(GBPm) 89.6 89.6 63.6 40.7%
Dividend (p) 7.5 7.5 7.5 -
Number of
------------------------------------- ---------- -------------- -------------- --------------
Stores 453 452 1
--------------
Grooming salons 316 314 2
--------------
Joint Venture First Opinion
vet practices 396 420 (24)
------------------------------------- ---------- -------------- -------------- --------------
Company managed First Opinion
vet practices 45 50 (5)
------------------------------------- ---------- -------------- -------------- --------------
1. FY20 non-underlying charges relating to costs incurred by the
Group in buying out, and in some cases closing, certain JV
practices include GBP6.6m charged against Vet Group, and Group,
non-underlying gross margin (FY19: GBP40.4m)
2. FY20 non-underlying charges also include GBP1.0m relating to
an accounting charge for the potential future acquisition of
minority stakes owned by vet Partners in the Specialist Referral
centres, which has been charged against non-underlying operating
costs (FY19: GBP0.4m)
3. Adjusted financial metrics for FY20, which exclude the impact
of the transition of IFRS16, have been provided to aid
comparability with the prior period. For further information on the
impact of IFRS16, see page 19
4. FY20 non-underlying cash costs include GBP10.0m relating to
Joint Venture practices that we have bought out (FY19: GBP8.8m),
plus GBP6.4m in relation to payments made to Shared Venture
Partners in our Specialist Referral centres to acquire certain
remaining minority stakes (FY19: GBP0.1m)
Financial review of FY20
Impact of COVID-19 on the FY20 financial statements
As we approached the end of our financial year, the impact of
COVID-19 in the UK meant that we experienced exceptionally high
levels of demand, notably across food products, both in-store and
online. This was characterised by existing customers pulling
forward purchases, as well as new customers accessing specific pet
products and healthcare services, and delivered an uplift in
revenue and profit for the year versus our previous
expectations.
Impact of Vet Group recalibration on the FY20 financial
statements
As part of the recalibration of our First Opinion veterinary
business, a total non-underlying charge of GBP6.6m (FY19: GBP40.4m)
has been recognised against both Vet Group, and Group, gross
profit. This accounts for all costs incurred by the Group relating
to practices that have been bought out and/or closed during the
year. In addition to this income statement charge, an existing
balance sheet provision of GBP9.3m brought forward from FY19 has
been utilised.
Total cumulative non-underlying costs related to buying out a
total of 57 Joint Venture practices, and subsequently closing 36 of
them, since the beginning of FY19 have been GBP47.0m. With this
one-off recalibration now complete, there will be no further
non-underlying charges relating to the actions we have taken, and
any further related cash outflow will be recognised within
underlying free cashflow.
Impact of IFRS16 on the FY20 financial statements
To aid comparability, the financial information in pages 15 to
20 and associated commentary have been presented on a constant
accounting basis and do not reflect the impact of IFRS16. The
impact of IFRS16 on the Group financial statements has been to
reduce Group underlying profit before tax by GBP6.0m, and is shown
in further detail on page 19.
Following the transition to reporting under IFRS16 in FY20, we
will report on a post-IFRS16 basis from FY21 onwards.
Revenue
Group revenue exceeded GBP1bn for the first time in FY20,
growing 10.2% to GBP1,058.8m (FY19: GBP961.0m) with like-for-like
(LFL) revenue growth of 9.0% (#) .
Retail revenue grew 9.7% to GBP937.6m (FY19: GBP854.6m), with
LFL revenue growth of 9.4% (#) . Strong growth in transaction
volumes helped deliver a store LFL of 7.7%, whilst omnichannel
revenue, including that generated by our subscription platforms,
grew 27.8% to GBP93.9m.
We made particularly strong share gains in Food, where revenues
grew by 13.6% to GBP517.4m (FY19: GBP455.4m). Within the Advanced
Nutrition category, the ongoing trend of premiumisation enabled us
to deliver revenue growth of 15.2 % to GBP242.1m (FY19: GBP210.1m)
and grow category market share . The strong growth in Food revenue
reflects not only our success in recruiting new customers
throughout the year, particularly puppy and kitten owners, but also
the exceptional level of sales seen in the closing weeks of the
year as noted above. Accessories revenue grew 5.1% to GBP375.3m
(FY19: GBP357.0m), with categories such as cat litter, dog toys and
Health & Hygiene performing particularly well throughout the
year.
Vet Group revenue grew 13.9% to GBP121.2m (FY19: GBP106.4m),
with LFL growth of 5.6% (#) . Customer sales made by all First
Opinion vet practices were up by 10.4% to GBP351.3m(#) (FY19:
GBP318.2m), whilst those made in Joint Venture veterinary practices
were up 6.4% to GBP329.7m(#) (FY19: GBP309.8m), all unaudited
figures, despite ending the year with 24 fewer JV practices.
Total Joint Venture fee income increased by 2.1% to GBP53.8m
(FY19: GBP52.6m), whilst LFL fee income growth was also 2.1%(#)
(FY19: 12.2%). This LFL growth in JV fee income was lower than the
prior year due to adjustments made throughout FY20 to the fee
arrangements for ongoing Joint Venture practices, but which have
helped contribute to an improvement in the underlying performance
of the estate.
From the point at which any practice buy out was completed, the
financial performance of that practice has been consolidated -
please refer to Note 1 in the financial statements for more detail.
This has led to consolidated customer revenue from company managed
First Opinion practices increasing significantly to GBP21.7m (FY19:
GBP8.1m), as we ended the year with 45 practices under our
ownership.
Elsewhere in the Vet Group, w e also saw steady performance in
our Specialist Referral division, where revenue grew 7.0% to
GBP39.6m (FY19: GBP37.0m).
Gross margin
Group underlying gross margin declined by 174 bps to 48.9%
(FY19: 50.7%), whilst Group statutory gross margin increased to
48.3% (FY19: 46.5%).
Underlying (and statutory) gross margin within Retail was 49.7%,
a reduction of 127 bps over the prior year (FY19: 51.0%). This was
driven by strong performance in Food, as noted above, which
delivered an adverse mix effect on margin. In addition, while the
growth in participation of Retail revenues from our omnichannel
business to 10.0% (FY19: 8.6%) contributed to an overall increase
in revenues, its greater mix of food product versus higher margin
accessories had a dilutive impact on gross margin.
This combined mix impact of Food and omnichannel sales
participation was particularly relevant during the final four weeks
of the year when we saw exceptional demand due to COVID-19. Prior
to that period, Retail gross margin for FY20 had been 50.4%.
Underlying gross margin within the Vet Group decreased by 531
bps to 42.7% (FY19: 48.0%). This decrease largely reflects the
impact of fee adjustments implemented for JV practices throughout
the year, which have supressed JV fee income, while the costs
incurred in generating this fee income and charged against gross
profit have remained relatively flat. Consolidation of the former
JV practices which have been retained under a company managed model
also had a dilutive impact on Vet Group gross margin, with the
margin profile of an individual practice being significantly lower
than that generated on JV fee income.
Finally, we saw a positive impact on Vet Group gross margin
resulting from a lower charge of GBP0.9m (FY19: GBP2.9m) being made
to the underlying provision held against operating loan funding
provided to First Opinion veterinary practices, which we expect to
continue operating as Joint Ventures. This underlying provision
represents c21% of the operating loan gross balance (FY19: c20%).
While the year on year provision as a percentage of the gross
balance has marginally increased, we believe this is appropriately
prudent given we have only recently completed our recalibration
actions and still have a Joint Venture estate of which a
significant proportion is immature.
Statutory Vet Group gross margin, after all non-underlying
charges, increased significantly to 37.2% (FY19: 10.1%). This
reflects a reduced charge of GBP6.6m (FY19: GBP40.4m) relating to
costs incurred by the Group completing the Vet Group recalibration
.
Operating profit and operating costs
Underlying Group EBIT was GBP103.3m (#) (FY19: GBP93.2m), with a
margin of 9.8% (#) (FY19: 9.7%).
Underlying Retail EBIT was GBP81.7m (#) (FY19: GBP67.2m) with a
margin of 8.7% (#) (FY19: 7.9%), with operating cost growth,
excluding depreciation and amortisation, of 4.5% to GBP349.2m
(FY19: GBP334.3m). This operating margin expansion was achieved
despite the lower gross margin noted above, and represents careful
management of operating costs.
Occupation costs (rent, service charges and other property
costs) declined as a percentage of Retail sales to 13.7% (FY19:
14.9%) due to rent reductions achieved across a number of lease
renewal negotiations. Colleague costs also decreased as a
percentage of Retail sales to 16.9% (FY19: 17.8%), driven by
efficiency initiatives in-store. Excluding IFRS16 right-of-use
assets, depreciation and amortisation in Retail increased slightly
to GBP35.3m (FY19: GBP34.3m).
Underlying Vet Group EBIT was GBP30.2m (#) (FY19: GBP32.1m) with
a margin of 24.9%(#) (FY19: 30.1%). Operating costs in the Vet
Group, excluding depreciation and amortisation, were GBP18.5m
(FY19: GBP16.5m), growth of 12.5% on the prior year. This was
largely due to consolidation of overhead costs relating to those JV
practices which have been bought out, plus various pre-opening
costs associated with expansion in our Specialist Referral
division. Excluding IFRS16 right-of-use assets, depreciation and
amortisation in the Vet Group increased to GBP3.0m (FY19:
GBP2.5m).
In the Vet Group, non-underlying operating costs totalling
GBP1.0m (FY19: GBP0.4m) were recognised in relation to the Shared
Venture ownership model in our Specialist Referral division, where
the option Pets at Home has to buy shares held by Shared Venture
Partners in the future is accounted for as a forward contract.
During the year, we exercised options to purchase shareholdings
from certain Partners at a total cash cost of GBP6.4m, such that
three centres are now wholly owned.
Central costs, including Group overheads and colleagues,
increased to GBP8.6m (FY19 : GBP6.1m).
Finance expense
Excluding IFRS16 interest charges, the net finance expense for
the year was GBP3.8m, a slight increase from the prior year (FY19:
GBP3.5m).
Profit before tax
Excluding the impact of IFRS16, underlying pre-tax profit was
GBP99.5m (#) (FY19: GBP89.7m) and pre-tax profit after charging for
all non-underlying items increased significantly to GBP91.9m (FY19:
GBP49.6m). This increase in pre-tax profit reflects the strength of
underlying trading in Retail, plus a reduced non-underlying charge
of GBP7.6m (FY19: GBP40.1m), largely relating to the recalibration
of the First Opinion veterinary business. Statutory pre-tax profit,
including the impact of IFRS16, was GBP85.9m (FY19: GBP49.6m).
Taxation, net income & EPS
After removing the impact of IFRS16, the underlying tax expense
for the period was GBP19.8m (#) , a rate of 19.9% on underlying
pre-tax profit.
Excluding the impact of IFRS16, underlying net income for the
year, after tax, increased by 13.3% to GBP79.7m (#) (FY19:
GBP70.4m) and underlying basic earnings per share were 16.0 pence
(#) (FY19: 14.1 pence).
Statutory basic earnings per share, including the impact of
IFRS16, were 13.5 pence (FY19: 6.1 pence).
Cash working capital
The cash movement in trading working capital for FY20 was an
inflow of GBP30.7m (#) (FY19: inflow of GBP17.9m). This comprised a
GBP5.7m decrease in inventory, a GBP16.2m increase in payables and
a GBP8.8m decrease in receivables.
We also provided support to some ongoing Joint Venture First
Opinion veterinary practices in the form of GBP2.5m of cash
operating loans in the year (FY19: GBP9.6m). This reduced the
overall Group cash working capital inflow to GBP28.2m.
The gross value of operating loans at the end of the year was
GBP37.5m (FY19: GBP42.2m). Following the completion of our buy-out
programme during the first half of FY20, operating loans totalling
GBP7.2m relating to these practices were written off in full by
utilising the 100% non-underlying provision established in FY19. As
such, the total provision of GBP8.0m (FY19: GBP14.3m) now held
against the gross value of operating loans is entirely an
underlying provision held against the balance of operating loans
for practices which we expect to continue operating as Joint
Ventures, at an average of c21%.
Capital investment
Excluding IFRS16 right-of-use asset additions, capital
investment was GBP38.3m (FY19: GBP34.5m), and was fully aligned to
our strategic priorities. The ongoing refurbishment and maintenance
of our existing store estate, including rollout of our pet care
centre format across a further 16 stores during FY20, totalled
GBP11.1m (FY19: GBP8.8m), and represented just 1.2% of Retail
sales. I nvestment in omnichannel and business systems totalled
GBP14.9m (FY19: GBP10.8m) as we continue to invest in our digital
and data capabilities to support future growth, and a further
GBP4.8m was invested in the organic growth of our Specialist
Referrals division. Cash capital expenditure was GBP39.6m (FY19:
GBP37.9m), and CROIC(#) was 19.7% (FY19:18.9%).
Group underlying free cashflow
Group underlying free cashflow (FCF) after interest, tax and
before acquisitions increased to GBP89.6m (#) (FY19: GBP63.6m),
representing a cash conversion rate of 63% (#) (FY19: 49%). The
increase in FCF compared with the prior year was achieved despite a
one-off additional payment of GBP10.7m relating to a change in
timing of Corporation Tax payments, which meant we paid a total of
GBP30.8m during FY20.
Group underlying free cashflow (#) (pre-IFRS16)
(GBPm) FY20 FY19
------------------------------------------------- --------------- ---------------
Group operating cashflow (#) 165.8 126.5
------------------------------------------------- --------------- ---------------
Tax (30.8) (18.6)
------------------------------------------------- --------------- ---------------
Net interest (3.2) (2.8)
------------------------------------------------- --------------- ---------------
Debt issue costs - (2.5)
------------------------------------------------- --------------- ---------------
Net capex (39.4) (37.2)
------------------------------------------------- --------------- ---------------
Purchase of own shares to satisfy colleague
options (2.8) (1.8)
------------------------------------------------- --------------- ---------------
Group underlying free cashflow (#) 89.6 63.6
------------------------------------------------- --------------- ---------------
FY20 Group underlying free cashflow Underlying FCF
(#) (GBPm) FCF conversion(2)
------------------------------------- --------------- ------------------
Retail 84.8 72.5%
------------------------------------- --------------- ------------------
Vet Group 16.7 50.2%
------------------------------------- --------------- ------------------
Central(1) (11.9) NM
------------------------------------- --------------- ------------------
Group underlying free cashflow
(#) 89.6 63.2%
------------------------------------- --------------- ------------------
1. Includes central costs of GBP8.6m plus interest paid of
GBP3.8m, purchase of own shares of GBP2.8m and a Corporation Tax
credit off GBP3.0m
2. Calculated as underlying free cashflow as a percentage of underlying EBITDA
The Group's net debt position at the end of the year was
GBP85.9m, which represents a leverage ratio of 0.6x underlying
EBITDA (#) on a pre-IFRS16 basis or 2.5x on a post-IFRS16
basis.
Group net debt (GBPm) FY20 FY19
-------------------------------------------- ------------ --------------
Opening net debt (pre-IFRS16) (120.5) (135.2)
-------------------------------------------- ------------ --------------
Underlying free cashflow(#) 89.6 63.6
-------------------------------------------- ------------ --------------
Ordinary dividends paid (37.1) (37.2)
-------------------------------------------- ------------ --------------
Acquisitions(3) (1.5) (2.8)
-------------------------------------------- ------------ --------------
Non-underlying cash outflow(4) (16.4) (8.9)
-------------------------------------------- ------------ --------------
Closing net debt (pre-IFRS16) (85.9) (120.5)
-------------------------------------------- ------------ --------------
Pre-IFRS16 leverage (Net debt/ underlying
EBITDA (#) ) 0.6x 0.9x
-------------------------------------------- ------------ --------------
Post-IFRS16 leverage (Net debt/ underlying
EBITDA (#) ) 2.5x 3.0x
============================================ ============ ==============
3. FY20 includes an investment in Tailster.com and in certain
company managed practices. FY19 includes the purchase of two mature
JV practices from Joint Venture Partners for GBP2.1m, which are now
operated as company managed practices, GBP(0.3)m of net cash
acquired by purchasing three other existing JV practices, and
deferred consideration of GBP1.0m relating to one of our Specialist
Referral centres.
4. FY20 includes GBP10.0m relating to practices bought out
during the year (FY19: GBP8.8m), plus GBP6.4m in relation to
payments made to certain Shared Venture Partners in our Specialist
Referral centres to acquire remaining minority stakes (FY19:
GBP0.1m)
Dividend
The Board has recommended a final dividend of 5.0 pence per
share, reflecting the strength of our performance last year and our
robust liquidity and balance sheet. This takes the total dividend
for the year to 7.5 pence per share, equal with the prior year. The
final dividend will be payable on 14 July 2020 to shareholders on
the register at the close of trading on 19 June 2020.
Transition to IFRS16
The financial statements for FY20 have been prepared under the
requirements of IFRS16 for the first time. Implementation of IFRS16
has had no effect on how the business is run, or on cash flows
generated. It has, however, had an impact on the assets,
liabilities and income statement of the Group, as well as the
classification of cash flows relating to lease contracts.
IFRS16 seeks to align the presentation of leased assets more
closely to owned assets. In doing so, a right-of-use asset and
lease liability are brought onto the balance sheet, with the lease
liability recognised at the present value of future lease payments.
Whilst the right-of-use asset is matched in value to the lease
liability at inception, it differs in value through the life of the
lease. The total value of the discounted lease liability under
IFRS16 on the Group's Balance Sheet at the end of FY20 is
GBP463.9m.
IFRS16 permits a choice on the method of implementation and
after careful consideration the Group has applied the modified
retrospective approach. Under this method, all prior year
comparative balances have not been restated, but the cumulative
effect of adopting IFRS16 has been recognised as an adjustment to
the opening balance sheet for FY20. Both the right-of-use asset and
lease liability are recognised as the present value of future lease
payments as of the date of transition, with the right-of-use asset
adjusted for any remaining deferred income relating to landlord
incentives and rent free periods, outstanding prepayments or
provisions for onerous leases.
In Retail, the application of IFRS16 results in all store and
distribution centre rents no longer being included within operating
costs but replaced instead by an additional depreciation charge. On
a post-IFRS16 basis, Retail operating costs excluding depreciation
and amortisation were GBP272.5m. Including all IFRS16 right-of-use
assets, total depreciation and amortisation was GBP104.3m, leading
to an operating margin of 9.5%.
In the Vet Group, right-of-use assets relate predominantly to
our Specialist Referral centres. On a post-IFRS16 basis, Vet Group
operating costs excluding depreciation were GBP16.1m. Including all
IFRS16 right-of-use assets, total depreciation and amortisation was
GBP5.1m, leading to an operating margin of 25.2%.
Including all IFRS16 interest charges, the net finance expense
for the period was GBP17.8m.
The net impact of IFRS16 in the year was to reduce Group
underlying and statutory profit before tax by GBP6.0m to GBP93.5m
and GBP85.9m respectively.
In order to clearly show the impact of transitioning to IFRS16,
we show a reconciliation of Group underlying profit before tax and
cashflow as follows.
Pre Exclude Include Include Post
GBPm (unaudited) IFRS16 rent depreciation interest IFRS16
----------------------------- ---------- -------------- ----------------------- ----------------- -------------
Revenue 1,058.8 - - - 1,058.8
----------------------------- ---------- -------------- ----------------------- ----------------- -------------
Operating lease rentals (79.1) 79.1 - - -
----------------------------- ---------- -------------- ----------------------- ----------------- -------------
Depreciation & amortisation (38.3) - (71.1) - (109.4)
----------------------------- ---------- -------------- ----------------------- ----------------- -------------
Underlying operating
profit (#) 103.3 79.1 (71.1) - 111.3
----------------------------- ---------- -------------- ----------------------- ----------------- -------------
Finance income 0.4 - - 0.1 0.5
----------------------------- ---------- -------------- ----------------------- ----------------- -------------
Finance expense (4.2) - - (14.1) (18.3)
----------------------------- ---------- -------------- ----------------------- ----------------- -------------
Group underlying PBT
(#) 99.5 79.1 (71.1) (14.0) 93.5
----------------------------- ---------- -------------- ----------------------- ----------------- -------------
Replace with
Pre Add back interest & capital Post
GBPm (unaudited) IFRS16 rent repayment IFRS16
------------------------------- ------------- ----------------- -------------------------------------- -----------
Group operating cashflow
(#) 165.8 79.1 - 244.9
------------------------------- ------------- ----------------- -------------------------------------- -----------
Tax (30.8) - - (30.8)
------------------------------- ------------- ----------------- -------------------------------------- -----------
Interest (3.2) - (14.0) (17.2)
------------------------------- ------------- ----------------- -------------------------------------- -----------
Repayment of lease obligations - - (67.0) (67.0)
------------------------------- ------------- ----------------- -------------------------------------- -----------
Net capex (39.4) - - (39.4)
------------------------------- ------------- ----------------- -------------------------------------- -----------
Purchase of own shares (2.8) - - (2.8)
------------------------------- ------------- ----------------- -------------------------------------- -----------
Other cashflow items - - 1.9 1.9
------------------------------- ------------- ----------------- -------------------------------------- -----------
Group underlying free
cashflow 89.6 79.1 (79.1) 89.6
------------------------------- ------------- ----------------- -------------------------------------- -----------
Impact of the UK's exit process from the EU
We continue our work to assess and mitigate the likely impact of
the United Kingdom's exit from the European Union (EU). With the UK
currently working towards 31 December as the date we will exit the
EU, we are keeping the following areas under review:
1) Consumer demand - although we expect the UK pet care market
to remain resilient, we will be vigilant to signs that consumer
demand is being adversely affected, so that we may respond
appropriately and expediently.
2) Although pet products are unlikely to 'spoil' as a result of
any border delays, there is a risk that our supply chain becomes
disrupted. In such circumstances, we may consider increasing our
inventory holding to mitigate the potential impact on our Retail
division.
3) We do not currently expect to see a material tariff impact,
as the majority of our imported products are sourced from outside
the EU.
4) Exchange rates - the exit process may prompt movements in the
USD/GBP exchange rate. In FY20, t he Group purchased products from
Asia to a value of around US$85m, although we expect to purchase
slightly less than that in FY21. Our policy is to use a mix of
foreign exchange forward contracts to hedge our USD requirement to
cover the next 18 months. 83% of our FY21 forecast USD spend is
currently hedged at an average rate of 1.28 USD:GBP, and we will
monitor exchange rates closely as we look to mitigate any pressure
on Retail gross margin.
5) A significant number of colleagues, particularly within our
Vet Group and distribution centres, are non-UK EU nationals. While
Brexit may result in changes to UK immigration policy which could
increase the risk around the availability, recruitment and
retention of these individuals, it may also make it easier to
recruit highly skilled workers. Although it is a positive step that
the Government has accepted the Migration Advisory Committee's
recommendation that veterinary surgeons be restored to the shortage
occupation list, we will continue to work closely with professional
bodies including the Royal College of Veterinary Surgeons and the
British Veterinary Association to assess the potential impact of
restrictions on free movement for EU nationals.
Mike Iddon
Chief Financial Officer
21 May 2020
Financial statements
Independent Auditor's Report
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated balance sheet
Consolidated statement of changes in equity as at 26 March
2020
Consolidated statement of changes in equity as at 28 March
2019
Consolidated statement of cash flows
Company balance sheet
Company statement of changes in equity as at 26 March 2020
Company statement of changes in equity as at 28 March 2019
Company income statement
Company statement of cash flows
Notes (forming part of the financial statements)
Glossary - Alternative Performance Measures
Advisors and contacts
Financial Statements
The financial information set out below does not constitute the
company's statutory accounts for the periods ended 26 March 2020 or
28 March 2019 but is derived from those accounts. Statutory
accounts for 2019 have been delivered to the registrar of
companies, and those for 2020 will be delivered in due course. The
auditor has reported on those accounts; their reports were (i)
unqualified, (ii) did not include a reference to any matters to
which the auditor drew attention by way of emphasis without
qualifying their report and (iii) did not contain a statement under
section 498 (2) or (3) of the Companies Act 2006
Consolidated income statement
52 week period ended 52 week period ended
26 March 2020 28 March 2019
------------------------- ---- ----------------------------------- -----------------------------------
Non-underlying
Underlying Non-underlying Underlying items (note
trading items (note Total trading 3) Total
Note GBPm 3) GBPm GBPm GBPm GBPm GBPm
------------------------- ---- ---------- -------------- ------- ---------- -------------- -------
Revenue 2 1,058.8 - 1,058.8 961.0 - 961.0
Cost of sales (540.0) (6.9) (546.9) (471.2) (22.5) (493.7)
Impairment losses
on receivables 3,17 (0.9) 0.3 (0.6) (2.9) (17.9) (20.8)
------------------------- ---- ---------- -------------- ------- ---------- -------------- -------
Gross profit 517.9 (6.6) 511.3 486.9 (40.4) 446.5
Selling and distribution
expenses (313.8) - (313.8) (314.5) - (314.5)
Administrative expenses 3 (92.8) (1.0) (93.8) (79.2) 0.3 (78.9)
------------------------- ---- ---------- -------------- ------- ---------- -------------- -------
Operating profit 2,3 111.3 (7.6) 103.7 93.2 (40.1) 53.1
Financial income 6 0.5 - 0.5 0.6 - 0.6
Financial expense 7 (18.3) - (18.3) (4.1) - (4.1)
------------------------- ---- ---------- -------------- ------- ---------- -------------- -------
Net financing expense (17.8) - (17.8) (3.5) - (3.5)
------------------------- ---- ---------- -------------- ------- ---------- -------------- -------
Profit before tax 93.5 (7.6) 85.9 89.7 (40.1) 49.6
Taxation 8 (18.6) 0.1 (18.5) (19.3) 0.2 (19.1)
------------------------- ---- ---------- -------------- ------- ---------- -------------- -------
Profit for the period 74.9 (7.5) 67.4 70.4 (39.9) 30.5
------------------------- ---- ---------- -------------- ------- ---------- -------------- -------
All activities relate to continuing operations.
Basic and diluted earnings per share attributable to equity
shareholders of the Company:
52 week 52 week
period period
ended 26 ended 28
Note March 2020 March 2019
-------------------------------------- ---- ----------- -----------
Equity holders of the parent - basic 5 13.5p 6.1p
Equity holders of the parent- diluted 5 13.2p 6.0p
-------------------------------------- ---- ----------- -----------
Dividends paid and proposed are disclosed in note 9.
The notes on pages 31 to 95 form an integral part of these
financial statements.
Consolidated statement of comprehensive income
52 week 52 week
period period
ended 26 ended 28
March 2020 March 2019
Note GBPm GBPm
-------------------------------------------------- ----- ----------- -----------
Profit for the period 67.4 30.5
Other comprehensive income
Items that are or may be recycled subsequently
into profit or loss:
Foreign exchange translation differences 22 (0.1) (0.1)
Effective portion of changes in fair value of
cash flow hedges 22 (5.5) 1.0
Other comprehensive income for the period, before
income tax (5.6) 0.9
Income tax on other comprehensive income 15,22 0.9 (0.4)
-------------------------------------------------- ----- ----------- -----------
Other comprehensive income for the period, net
of income tax (4.7) 0.5
-------------------------------------------------- ----- ----------- -----------
Total comprehensive income for the period 62.7 31.0
-------------------------------------------------- ----- ----------- -----------
The notes on pages 31 to 95 form an integral part of these
financial statements.
Consolidated balance sheet
At 26 March At 28 March
Note 2020 GBPm 2019 GBPm
--------------------------------------------- ---- ----------- -----------
Non-current assets
Property, plant and equipment 11 117.1 123.7
Right-of-use assets 12 425.2 -
Intangible assets 13 1,006.4 1,000.7
Other non-current assets 16 20.9 18.7
--------------------------------------------- ---- ----------- -----------
1,569.6 1,143.1
--------------------------------------------- ---- ----------- -----------
Current assets
Inventories 14 62.8 68.2
Other financial assets 16 1.5 1.6
Trade and other receivables 17 55.9 68.9
Cash and cash equivalents 18 79.1 60.5
--------------------------------------------- ---- ----------- -----------
199.3 199.2
--------------------------------------------- ---- ----------- -----------
Total assets 1,768.9 1,342.3
--------------------------------------------- ---- ----------- -----------
Current liabilities
Trade and other payables 20 (196.6) (185.8)
Lease liabilities 12 (83.7) -
Corporation tax (0.5) (10.2)
Provisions 21 (3.9) (15.4)
Other financial liabilities 16 (2.2) (7.3)
--------------------------------------------- ---- ----------- -----------
(286.9) (218.7)
--------------------------------------------- ---- ----------- -----------
Non-current liabilities
Other interest-bearing loans and borrowings 19 (163.3) (178.8)
Other payables 20 - (33.6)
Lease liabilities 12 (380.2) -
Provisions 21 (1.3) (1.7)
Other financial liabilities 16 (5.8) (2.5)
Deferred tax liabilities 15 (0.4) (4.0)
--------------------------------------------- ---- ----------- -----------
(551.0) (220.6)
--------------------------------------------- ---- ----------- -----------
Total liabilities (837.9) (439.3)
--------------------------------------------- ---- ----------- -----------
Net assets 931.0 903.0
--------------------------------------------- ---- ----------- -----------
Equity attributable to equity holders of the
parent
Ordinary share capital 22 5.0 5.0
Consolidation reserve (372.0) (372.0)
Merger reserve 113.3 113.3
Translation reserve (0.1) (0.0)
Cash flow hedging reserve (2.8) 0.8
Retained earnings 1,187.6 1,155.9
--------------------------------------------- ---- ----------- -----------
Total equity 931.0 903.0
--------------------------------------------- ---- ----------- -----------
On behalf of the Board:
Mike Iddon
Group Chief Financial Officer
Company number: 08885072
The notes on pages 31 to 95 form an integral part of these
financial statements.
Consolidated statement of changes in equity as at 26 March
2020
Cash flow
Share Consolidation Merger hedging Translation Retained Total
capital reserve reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------------------ -------- ------------- -------- --------- ----------- --------- -------
Balance at 28 March 2019 5.0 (372.0) 113.3 0.8 (0.0) 1,155.9 903.0
Total comprehensive income
for the period
Profit for the period - - - - - 67.4 67.4
Other comprehensive income
(note 22) - - - (4.6) (0.1) - (4.7)
------------------------------------ -------- ------------- -------- --------- ----------- --------- -------
Total comprehensive income
for the period - - - (4.6) (0.1) 67.4 62.7
------------------------------------ -------- ------------- -------- --------- ----------- --------- -------
Hedging gains & losses reclassified
to inventory - - - 1.0 - - 1.0
Total hedging gains & losses
reclassified to inventory - - - 1.0 - - 1.0
------------------------------------ -------- ------------- -------- --------- ----------- --------- -------
Transactions with owners,
recorded directly in equity
Equity dividends paid - - - - - (37.1) (37.1)
Share based payment charge - - - - - 4.2 4.2
Purchase of own shares - - - - - (2.8) (2.8)
------------------------------------ -------- ------------- -------- --------- ----------- --------- -------
Total contributions by and
distributions to owners - - - - - (35.7) (35.7)
------------------------------------ -------- ------------- -------- --------- ----------- --------- -------
Balance at 26 March 2020 5.0 (372.0) 113.3 (2.8) (0.1) 1,187.6 931.0
------------------------------------ -------- ------------- -------- --------- ----------- --------- -------
Consolidated statement of changes in equity as at 28 March
2019
Cash flow
Share Consolidation Merger hedging Translation Retained Total
capital reserve reserve reserve reserve earnings equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
----------------------------------- -------- ------------- -------- --------- ----------- --------- -------
Balance at 29 March 2018 5.0 (372.0) 113.3 (1.0) 0.1 1,160.9 906.3
Total comprehensive income
for the period
Profit for the period - - - - - 30.5 30.5
Other comprehensive income
(note 22) - - - 0.6 (0.1) - 0.5
----------------------------------- -------- ------------- -------- --------- ----------- --------- -------
Total comprehensive income
for the period - - - 0.6 (0.1) 30.5 31.0
----------------------------------- -------- ------------- -------- --------- ----------- --------- -------
Hedging gains & losses reclassified
to inventory(1) - - - 1.2 - - 1.2
Total hedging gains & losses
reclassified to inventory - - - 1.2 - - 1.2
----------------------------------- -------- ------------- -------- --------- ----------- --------- ---------
Transactions with owners,
recorded directly in equity
Equity dividends paid - - - - - (37.2) (37.2)
Share based payment charge - - - - - 3.5 3.5
Purchase of own shares - - - - - (1.8) (1.8)
----------------------------------- -------- ------------- -------- --------- ----------- --------- -------
Total contributions by and
distributions to owners - - - - - (35.5) (35.5)
----------------------------------- -------- ------------- -------- --------- ----------- --------- -------
Balance at 28 March 2019 5.0 (372.0) 113.3 0.8 (0.0) 1,155.9 903.0
----------------------------------- -------- ------------- -------- --------- ----------- --------- -------
(1) The comparative consolidated statement of changes in equity
has been restated to show hedging gains & losses reclassified
to inventory to enhance comparability.
Consolidated statement of cash flows
52 week 52 week
period period
ended ended
26 March 28 March
2020 2019
GBPm GBPm(1)
------------------------------------------------------------------- --------- ---------------------------------
Cash flows from operating activities
Profit for the period 67.4 30.5
Adjustments for:
Depreciation and amortisation 109.4 36.8
Non-underlying impairment 3.4 -
Financial income (0.5) (0.6)
Financial expense 18.3 4.1
Settlement of 'put & call' liabilities (growth element) (0.8) (0.1)
Share based payment charges 4.2 3.5
Taxation 18.5 19.1
------------------------------------------------------------------- --------- ---------------------------------
219.9 93.3
Decrease/(increase) in trade and other receivables 5.4 (1.8)
Decrease/(increase) in inventories 5.7 (7.3)
Increase in trade and other payables 16.9 12.6
(Decrease)/increase in provisions (0.7) 1.9
(Decrease)/increase in working capital relating to non-underlying
items (1.2) 27.7
------------------------------------------------------------------- --------- ---------------------------------
246.0 126.4
Tax paid (30.8) (18.6)
------------------------------------------------------------------- --------- ---------------------------------
Net cash flow from operating activities 215.2 107.8
------------------------------------------------------------------- --------- ---------------------------------
Cash flows from investing activities
Proceeds from the sale of property, plant and equipment 0.4 0.6
Interest received 0.5 0.6
Investment in other financial assets (1.0) -
Loans issued - (0.2)
Acquisition of subsidiaries, net of cash acquired (underlying) (0.5) (1.1)
Acquisition of subsidiaries, net of cash acquired (non-underlying) (0.5) (0.7)
Other costs associated with acquisition of subsidiaries
(non-underlying) (3.7) (2.4)
Repayment of borrowings owed by JV practices in advance
of acquisition of subsidiaries (underlying) - (0.7)
Repayment of borrowings owed by JV practices in advance
of acquisition of subsidiaries (non-underlying) (5.9) (5.7)
Acquisition of property, plant and equipment and other
intangible assets (39.6) (37.4)
Net cash used in investing activities (50.3) (47.0)
------------------------------------------------------------------- --------- ---------------------------------
Cash flows from financing activities
Equity dividends paid (37.1) (37.2)
Proceeds from new loan 61.0 181.0
Repayment of borrowings (77.0) (195.0)
Debt issue costs - (2.5)
Capital lease payments (67.0) -
Settlement of 'put and call' liabilities (minimum amount) (5.6) (1.0)
Purchase of own shares (2.8) (1.8)
Finance lease obligations (0.1) (0.2)
Interest paid (3.7) (3.4)
Interest paid on lease obligations (14.0) -
------------------------------------------------------------------- --------- ---------------------------------
Net cash used in financing activities (146.3) (60.1)
------------------------------------------------------------------- --------- ---------------------------------
Net increase in cash and cash equivalents 18.6 0.7
Cash and cash equivalents at beginning of period 60.5 59.8
------------------------------------------------------------------- --------- ---------------------------------
Cash and cash equivalents at end of period 79.1 60.5
------------------------------------------------------------------- --------- ---------------------------------
(1) The comparative cash flow statement has been restated to
enhance comparability.
The notes on pages 31 to 95 form an integral part of these
financial statements.
Company balance sheet
At 26 March At 28 March
Note 2020 GBPm 2019 GBPm
--------------------------------------------- ---- ----------- -----------
Non-current assets
Investments in subsidiaries 28 936.2 936.2
936.2 936.2
--------------------------------------------- ---- ----------- -----------
Current assets
Other financial assets 16 0.3 -
Trade and other receivables 17 579.2 578.3
Cash and cash equivalents 18 - -
Deferred tax assets 15 0.4 0.0
--------------------------------------------- ---- ----------- -----------
579.9 578.3
--------------------------------------------- ---- ----------- -----------
Total assets 1,516.1 1,514.5
--------------------------------------------- ---- ----------- -----------
Current liabilities
Trade and other payables 20 (387.8) (330.1)
Other financial liabilities 16 - (0.1)
--------------------------------------------- ---- ----------- -----------
(387.8) (330.2)
--------------------------------------------- ---- ----------- -----------
Non-current liabilities
Other interest-bearing loans and borrowings 19 (163.3) (178.8)
Other financial liabilities 16 (2.3) -
(165.6) (178.8)
--------------------------------------------- ---- ----------- -----------
Total liabilities (553.4) (509.0)
--------------------------------------------- ---- ----------- -----------
Net assets 962.7 1,005.5
--------------------------------------------- ---- ----------- -----------
Equity attributable to equity holders of the
parent
Ordinary share capital 22 5.0 5.0
Merger reserve 113.3 113.3
Cash flow hedging reserve (1.6) (0.1)
Retained earnings 846.0 887.3
--------------------------------------------- ---- ----------- -----------
Total equity 962.7 1,005.5
--------------------------------------------- ---- ----------- -----------
On behalf of the Board:
Mike Iddon
Group Chief Financial Officer
Company number: 08885072
The notes on pages 31 to 95 form an integral part of these
financial statements.
Company statement of changes in equity as at 26 March 2020
Cash flow
Merger hedging Retained
Share capital reserve reserve earnings Total equity
GBPm GBPm GBPm GBPm GBPm
----------------------------------------- ------------- -------- --------- --------- ------------
Balance at 28 March 2019 5.0 113.3 (0.1) 887.3 1,005.5
Total comprehensive income for
the period
Loss for the period - - - (5.6) (5.6)
Other comprehensive income - - (1.5) - (1.5)
----------------------------------------- ------------- -------- --------- --------- ------------
Total comprehensive income for
the period - - (1.5) (5.6) (7.1)
----------------------------------------- ------------- -------- --------- --------- ------------
Transactions with owners, recorded
directly in equity
Equity dividends paid - - - (37.1) (37.1)
Share based payment charge - - - 4.2 4.2
Purchase of own shares - - - (2.8) (2.8)
----------------------------------------- ------------- -------- --------- --------- ------------
Total contributions by and distributions
to owners - - - (35.7) (35.7)
Balance at 26 March 2020 5.0 113.3 (1.6) 846.0 962.7
----------------------------------------- ------------- -------- --------- --------- ------------
Company statement of changes in equity as at 28 March 2019
Cash flow
Merger hedging Retained
Share capital reserve reserve earnings Total equity
GBPm GBPm GBPm GBPm GBPm
----------------------------------------- ------------- -------- --------- --------- ------------
Balance at 29 March 2018 5.0 113.3 0.8 932.8 1,051.9
Total comprehensive income for
the period
Loss for the period - - - (6.9 ) (6.9)
Other comprehensive income - - (0.9) - (0.9)
Total comprehensive income for
the period - - (0.9) (6.9 ) (7.8 )
----------------------------------------- ------------- -------- --------- --------- ------------
Transactions with owners, recorded
directly in equity
Equity dividends paid - - - (37.2) (37.2)
Share based payments charge - - - 0.4 0.4
Purchase of own shares - - - (1.8) (1.8)
Total contributions by and distributions
to owners - - - (38.6) (38.6)
Balance at 28 March 2019 5.0 113.3 (0.1) 887.3 1,005.5
----------------------------------------- ------------- -------- --------- --------- ------------
Company income statement
As permitted by section 408 of the Companies Act 2006, the
Company's income statement has not been included in these financial
statements. The Company's loss for the 52 week period ended 26
March 2020 was GBP5.6m (loss for the 52 week period ended 28 March
2019 was GBP6.9m).
Company statement of cash flows
52 week 52 week
period ended period
26 March ended 28
2020 March 2019
GBPm GBPm
------------------------------------------------- ------------- -----------
Cash flows from operating activities
Loss for the period (5.6) (6.9)
Financial expense 4.2 4.1
Share based payment charges 4.2 0.4
Tax (2.6) -
-------------------------------------------------- ------------- -----------
0.2 (2.4)
Increase in trade and other receivables (1.3) (1.5)
Increase in trade and other payables 57.7 61.1
Tax paid 3.0 -
-------------------------------------------------- ------------- -----------
Net cash flow from operating activities 59.6 57.2
-------------------------------------------------- ------------- -----------
Cash flows from financing activities
Equity dividends paid (37.1) (37.2)
Proceeds from new loan 61.0 181.0
Repayment of borrowings (77.0) (195.0)
Debt issue costs - (2.5)
Interest paid (3.7) (3.4)
Purchase of own shares (2.8) (1.8)
-------------------------------------------------- ------------- -----------
Net cash used in financing activities (59.6) (58.9)
-------------------------------------------------- ------------- -----------
Net decrease in cash and cash equivalents - (1.7)
Cash and cash equivalents at beginning of period - 1.7
-------------------------------------------------- ------------- -----------
Cash and cash equivalents at end of period - -
-------------------------------------------------- ------------- -----------
Notes (forming part of the financial statements)
Pets at Home Group Plc (the Company) is a company incorporated
in the United Kingdom and its registered office is Epsom Avenue,
Stanley Green, Handforth, Cheshire, SK9 3RN.
1 Significant accounting policies
The accounting policies set out below have, unless otherwise
stated, been applied consistently to all periods presented in these
consolidated financial statements.
1.1 Basis of preparation
The consolidated financial statements presented in this document
have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union. The
Company's financial statements have been prepared in accordance
with IFRS as adopted by the European Union and as applied in
accordance with the provisions of the Companies Act 2006. The
Company has taken advantage of the exemption provided under section
408 of the Companies Act 2006 not to publish its individual income
statement and related notes.
The financial statements are prepared under the historical cost
convention, as modified by the revaluation of derivative financial
instruments to fair value, and in accordance with those parts of
the Companies Act 2006 applicable to companies reporting under IFRS
as adopted by the European Union.
The Group has initially adopted the following new standards from
29 March 2019 and these have been applied in these financial
statements.
IFRS 16 Leases (effective date 1 January 2019)
IFRS 16 Leases is effective for the Group from 29 March 2019 and
replaces existing lease guidance under IAS 17 Leases. IFRS 16 sets
out the principles for the recognition, measurement, presentation
and disclosure of leases and lessees to account for all leases
under a single on-balance sheet model similar to the accounting for
finance leases under IAS 17.
Leases in which the Group is a lessee
The majority of the Group's trading stores, standalone
veterinary practices, specialist referral centres, distribution
centres and support offices are leased. The Group also has a number
of non-property leases relating to vehicles, equipment and material
handling equipment.
Under IFRS 16, the Group recognises a right-of-use asset
representing its right to use the underlying asset and a lease
liability representing its obligation to make lease payments. The
lease liability is initially measured at the present value of the
remaining lease payments, discounted using the interest rate
implicit in the lease, or if that rate cannot be readily
determined, the Group's incremental borrowing rate. The rate
implicit in the lease cannot be readily determined and therefore a
rate based on the Group's incremental borrowing rate is used. This
rate is adjusted to take into account the risk associated with the
length of the lease. A higher discount rate is applied to a longer
lease. Lease payments will include any fixed payments, including as
a result of stepped rent increases.
The right-of-use asset is initially measured at cost, which
comprises the initial amount of the lease liability adjusted for
any lease payments made at or before the lease commencement date
and any lease incentives received or premiums paid.
Under IAS 17, the Group recognised operating lease expenses on a
straight line basis over the term of the lease, and recognised
assets and liabilities only to the extent that there was a timing
difference between actual lease payments and the expense
recognised. Lease incentives received or paid were recognised as an
integral part of the total lease expense over the term of the
lease. Rent prepayments were disclosed within prepayments, and
deferred income in respect of landlord incentives on property
leases was disclosed within trade and other payables. Under IFRS
16, the rent charge is replaced by a depreciation charge for the
right-of-use asset and an interest expense on the lease
liability.
After the commencement date, the lease liability will be
increased as interest is charged and reduced as lease payments are
made. The carrying value of the lease liability will be reassessed
on agreement of a lease modification event, such as a change in the
fixed amount payable or a change in the lease term. The discount
rate used will be reassessed if the length of the lease is
extended.
There are recognition exemptions for low-value assets and
short-term leases with a lease term of 12 months or less. Any
leases under a short term licence agreement are excluded as they
fall into the lease term of 12 months or less. The Group recognises
the lease payments associated with these leases as an expense on a
straight-line basis over the term of the lease. The total value of
leases where the Group has taken a recognition exemption is
disclosed in note 12.
Leases in which the Group is a lessor
Lessor accounting remains similar to current accounting under
IAS 17. At lease inception, lessors will determine whether each
lease is a finance lease or an operating lease. To classify each
lease, the Group makes an overall assessment of whether the lease
transfers substantially all of the risks and rewards incidental to
ownership of the underlying asset. If this is considered to be the
case, then the lease is recognised as a finance lease, if not then
it is recognised as an operating lease. As part of this assessment,
the Group considers certain factors such as whether the lease is
for the majority of the economic life of the asset.
The Group has a small number of leases where it is an
intermediate lessor. For these leases, it accounts for the interest
in the head lease and sub-lease separately. It assesses the lease
classification of the sub-lease with reference to the right-of-use
asset arising from the head lease, not with reference to the
underlying asset.
The Group has reassessed the classification of sub-leases in
which the Group is a lessor. Under IAS 17, the sub-leases were
classified with reference to the underlying asset which resulted in
all sub-leases being classified as operating leases. The Group will
reclassify a small number of sub-leases as a finance lease,
resulting in recognition of a finance lease receivable of GBP2.4m
as at 29 March 2019. Under IFRS 16, the finance lease is assessed
by reference to the right-of-use asset under the head lease rather
than the underlying asset. There will be no change to the
accounting for the remaining sub-leases which continue to be
accounted for as an operating lease, and income from these leases
will continue to be recognised on a straight-line basis over the
term of the lease, as disclosed in note 3.
The Group currently receives rental income from related Joint
Venture veterinary practices which are located within the Group's
retail stores. These rental incomes are disclosed in note 3. Under
IFRS 16, the lease classification of sub-leases is assessed by
reference to the right-of-use asset under the head lease rather
than the underlying asset. Therefore there will be no change in
accounting for this rental income, which will continue to be
presented as other income within operating expenses.
Notes (forming part of the financial statements) continued
1 Significant accounting policies (continued)
1.1 Basis of preparation (continued)
Transition
The Group has adopted IFRS 16 on 29 March 2019 using the
modified retrospective approach. The cumulative effect of adopting
IFRS 16 has been recognised as an adjustment to the opening balance
sheet as at 29 March 2019 with no restatement of comparable
information. There is no impact to the statement of changes in
equity. Further details and the impact of changes are disclosed in
note 29.
1.2 Measurement convention
The consolidated financial statements are prepared on the
historical cost basis except that the following assets and
liabilities are stated at their fair value: derivative financial
instruments, financial instruments classified as fair value through
the profit or loss. Non-current assets held for sale are stated at
the lower of previous carrying amount and fair value less costs to
sell.
1.3 Going concern
The Company's business activities, together with the factors
likely to affect its future development, performance and position,
are set out in the Strategic Report, including a detailed COVID-19
assessment within the Chief Executive's Statement. The financial
position of the Company, its cash flows, liquidity position and
borrowing facilities are described in the Chief Financial Officer's
Review. In addition, note 23 to the financial statements includes
the Company's objectives, policies and processes for managing its
capital; its financial risk management objectives; details of its
financial instruments and hedging activities; and its exposures to
credit risk and liquidity risk.
In assessing the Group's continued adoption of the going concern
basis of preparation, the Directors have carefully considered the
impact of COVID-19 on the Group's financial position, liquidity and
future performance. The Group is deemed an 'essential retailer' by
the Government and as such stores and veterinary practices have
continued to trade throughout, albeit at restricted levels, and
higher levels of online orders have continued to be fulfilled from
distribution centres. In forecasting cash flows over 12 months from
the date of signing of the financial statements, the Directors have
adjusted the Board approved business plan to reflect continued
reduced sales in Retail and Vets within the first half of 2021
financial year (COVID-19 adjusted forecast), with a return to our
original business plan thereafter. In the period post year end,
online sales have remained at materially elevated levels compared
to business plan, and in-store sales have outperformed the
depressed level included within the COVID-19 adjusted forecast.
Strong performance during the financial year ended 26 March 2020
has meant that the Group has entered the next financial year with
total liquidity including cash balances of GBP162m. The Group has
access to a revolving facility of GBP248m, which expires in
September 2023, with GBP165m drawn down at 26 March 2020. The
lowest level of headroom forecast over the next 12 months from the
date of signing of the financial statements under COVID-19 adjusted
forecast referred to above is in excess of GBP80m; this is before
the additional GBP100m facility discussed below. The Group has been
in compliance with all covenants applicable to this facility within
the financial year, and is forecast to continue to be in compliance
for 12 months from the date of signing of the financial statements,
including under the COVID-19 downside sensitivity discussed above.
Given current uncertainty over the duration of lockdown / social
distancing measures, post year end the Group have arranged for an
additional credit facility of GBP100m to provide further certainty
over liquidity, should it be required.
The Directors of Pets at Home Group Plc, having made appropriate
enquiries, consider that adequate resources exist for the Group to
continue in operational existence for the foreseeable future and
that, therefore, it is appropriate to adopt the going concern basis
in preparing the consolidated financial statements as at and for
the period ended 26 March 2020.
1.4 Basis of consolidation
Subsidiaries
Subsidiaries are entities controlled by the Group. The Group
controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
In assessing control, the Group takes into consideration potential
voting rights that are currently exercisable. The acquisition date
is the date on which control is transferred to the acquirer. The
financial statements of subsidiaries are included in the
consolidated financial statements from the date that control
commences until the date that control ceases. Losses applicable to
the non-controlling interests in a subsidiary are allocated to the
non-controlling interests even if doing so causes the
non-controlling interests to have a deficit balance.
The Group and Company operate an Employee Benefit Trust (EBT)
for the purposes of acquiring shares to fund share awards made to
employees. The EBT is deemed to be a subsidiary of the Group and
Company as Pets at Home Group Plc is considered to be the ultimate
controlling party for accounting purposes. The assets and
liabilities of this trust have been included in the consolidated
financial information. The cost of purchasing own shares held by
the EBT is accounted for in retained earnings.
Investment in Joint Venture veterinary practices
The Group has a number of non-participatory shareholdings in
veterinary practice companies, which are accounted for as Joint
Venture arrangements. The veterinary practices were established
under terms that require mutual agreement between the Group and the
Joint Venture Partner, and do not give the Group power over
decision making to affect its exposure to, or the extent of, the
returns from its involvement with the practices and therefore are
not consolidated in these financial statements. Further, the Group
is not entitled to profits, losses, or any surplus on winding up or
disposal of the Joint Venture veterinary practices, and as such no
participatory interest is recognised. The Group's category of
shareholding in the Joint Venture veterinary practices entitles the
Group to charge management fees for support services provided. For
further details see notes 16, 17 and 27.
The investments have been equity accounted for in the Group's
financial statements in accordance with IAS 28.10. As the Group's
shares are non-participatory, and therefore the Group does not
share in any profits, losses or other distribution of value from
the Joint Venture company, the investments are held at cost less
impairment, which is deemed to be their carrying value as explained
further in note 16.
Notes (forming part of the financial statements) continued
1 Significant accounting policies (continued)
1.5 Foreign currency
Transactions in foreign currencies are translated to the
respective functional currencies of Group entities at the foreign
exchange rate ruling at the date of the transaction. Monetary
assets and liabilities denominated in foreign currencies at the
balance sheet date are retranslated to the functional currency at
the foreign exchange rate ruling at that date. Foreign exchange
differences arising on translation are recognised in the income
statement, except for differences arising on the retranslation of a
financial liability designated as a hedge of the net investment in
a foreign operation that is effective, or qualifying cash flow
hedges, which are recognised directly in other comprehensive
income. Non-monetary assets and liabilities that are measured in
terms of historical cost in a foreign currency are translated using
the exchange rate at the date of the transaction. Non-monetary
assets and liabilities denominated in foreign currencies that are
stated at fair value are retranslated to the functional currency at
foreign exchange rates ruling at the dates the fair value was
determined.
The assets and liabilities of foreign operations, including
goodwill and fair value adjustments arising on consolidation, are
translated to the Group's presentational currency, sterling, at
foreign exchange rates ruling at the balance sheet date. The
revenues and expenses of foreign operations are translated at an
average rate for the period where this rate approximates to the
foreign exchange rates ruling at the dates of the transactions.
Exchange differences arising from this translation of foreign
operations are reported as an item of other comprehensive income
and accumulated in the translation reserve or non-controlling
interest, as the case may be.
Functional currency
The consolidated financial statements are presented in sterling
which is the Group and Company's functional currency and have been
rounded to the nearest million.
1.6 Classification of financial instruments issued by the Group
Following the adoption of IAS 32, financial instruments issued
by the Group are treated as equity only to the extent that they
meet the following two conditions:
(a) they include no contractual obligations upon the Company (or
Group as the case may be) to deliver cash or other financial assets
or to exchange financial assets or financial liabilities with
another party under conditions that are potentially unfavourable to
the Company (or Group); and
(b) where the instrument will or may be settled in the Company's
own equity instruments, it is either a non-derivative that includes
no obligation to deliver a variable number of the Company's own
equity instruments or is a derivative that will be settled by the
Company exchanging a fixed amount of cash or other financial assets
for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of
issue are classified as a financial liability.
1.7 Non-derivative financial instruments
Non-derivative financial instruments comprise investments in
equity and debt securities, trade and other receivables, cash and
cash equivalents, loans and borrowings, and trade and other
payables.
Trade and other receivables
Trade and other receivables are recognised initially at fair
value. Subsequent to initial recognition they are measured at
amortised cost using the effective interest method, less any
expected credit loss.
Trade and other payables
Trade and other payables are recognised initially at fair value.
Subsequent to initial recognition they are measured at amortised
cost using the effective interest method.
Investments in debt and equity securities are explained in note
1.12.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call
deposits. Bank overdrafts that are repayable on demand and form an
integral part of the Group's cash management are included as a
component of cash and cash equivalents for the purpose only of the
cash flow statement.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair
value, net of attributable transaction costs. Subsequent to initial
recognition, interest-bearing borrowings are stated at amortised
cost using the effective interest method.
Contingent consideration
Contingent consideration on acquisition of a subsidiary is
valued at fair value at the time of acquisition. Any subsequent
change in fair value is recognised in profit or loss (see
1.13).
Notes (forming part of the financial statements) continued
1 Significant accounting policies (continued)
1.8 Derivative financial instruments and hedging
Derivative financial instruments
Derivative financial instruments are recognised at fair value.
The gain or loss on re-measurement to fair value is recognised
immediately in profit or loss. However, where derivatives qualify
for hedge accounting, recognition of any resultant gain or loss
depends on the nature of the item being hedged (see below).
Cash flow hedges
Where a derivative financial instrument is designated as a hedge
of the variability in cash flows of a recognised asset or
liability, or a highly probable forecast transaction, the effective
part of any gain or loss on the derivative financial instrument is
recognised directly in the hedging reserve. Any ineffective portion
of the hedge is recognised immediately in the income statement.
If a hedge of a forecast transaction subsequently results in the
recognition of a financial asset or a financial liability, the
associated gains and losses that were recognised directly in equity
are reclassified into profit or loss in the same period or periods
during which the asset acquired or liability assumed affects profit
or loss, i.e. when interest income or expense is recognised.
For cash flow hedges, other than those covered by the preceding
two policy statements, the associated cumulative gain or loss is
removed from equity and recognised in the income statement in the
same period or periods during which the hedged forecast transaction
affects profit or loss.
When a hedging instrument expires or is sold, terminated or
exercised, or the entity revokes designation of the hedge
relationship but the hedged forecast transaction is still expected
to occur, the cumulative gain or loss at that point remains in
equity and is recognised in accordance with the above policy when
the transaction occurs. If the hedged transaction is no longer
expected to take place, the cumulative unrealised gain or loss
recognised in equity is recognised in the income statement
immediately.
1.9 Intra-group financial instruments
Financial guarantee contracts to guarantee the indebtedness of
companies within the Group are considered to be insurance
arrangements and accounted for as such. In this respect, the Group
treats the guarantee contract as a contingent liability until such
time as it becomes probable that a payment will be required under
the guarantee.
1.10 Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated
depreciation and accumulated impairment losses. Where parts of an
item of property, plant and equipment have different useful lives,
they are accounted for as separate items of property, plant and
equipment.
Depreciation is charged to the income statement on a
straight-line basis over the estimated useful lives of each part of
an item of property, plant and equipment. Land is not depreciated.
The estimated useful lives are as follows:
Freehold property -50 years
Fixtures, fittings, -3-10 years
tools and equipment
Leasehold improvements -the term
of the lease
Depreciation methods, useful lives and residual values are
reviewed at each balance sheet date.
1.11 Intangible assets
Intangible assets acquired in a business combination
Intangible assets acquired in a business combination and
recognised separately from goodwill are initially recognised at
their fair value at the acquisition date (which is regarded as
their cost).
Subsequent to initial recognition, intangible assets acquired in
a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis
as intangible assets that are acquired separately. Customer lists
are valued based on the forecast net present value of the future
economic relationship with those customers, adjusted for forecast
retention rates. Customer lists are amortised on a straight line
basis over 10 years. Software is stated at cost less accumulated
amortisation and is amortised on a straight line basis between two
and seven years.
1.12 Investments in debt and equity securities
Other investments in debt and equity securities held by the
Group are classified at fair value, with any resultant gain or loss
being recognised through other comprehensive income ('FVOCI') in
the case of monetary items such as debt securities, foreign
exchange gains and losses. Where these investments are
interest-bearing, interest calculated using the effective interest
method is recognised in profit or loss.
Notes (forming part of the financial statements) continued
1 Significant accounting policies (continued)
1.13 Business combinations
Business combinations are accounted for by applying the
acquisition method as at the acquisition date, which is the date on
which control is transferred to the Group.
Acquisitions on or after 26 March 2010
For acquisitions on or after 26 March 2010, the Group measures
goodwill at the acquisition date as:
the fair value of the consideration transferred; plus
the recognised amount of any non-controlling interests in the
acquiree; plus
the fair value of the existing equity interest in the acquiree;
less
the net recognised amount (generally fair value) of the
identifiable assets acquired and liabilities assumed.
When the excess is negative, a bargain purchase gain is
recognised immediately in profit or loss.
Costs related to the acquisition, other than those associated
with the issue of debt or equity securities, are expensed as
incurred.
Any contingent consideration payable is recognised at fair value
at the acquisition date. If the contingent consideration is
classified as equity, it is not re-measured and settlement is
accounted for within equity. Otherwise, subsequent changes to the
fair value of the contingent consideration are recognised in profit
or loss. If contingent consideration is payable and is dependent on
future employment, it is recognised as an expense over the relevant
period as a cost of continuing employment.
A combined put and call option over non-controlling interests is
recognised at fair value at the acquisition date and included
within the valuation of goodwill. Subsequent changes to fair value
are recognised in profit or loss.
Where a combined written put and call option exists over a
non-controlling interest, and the conditions of the agreement
provide the Group with present access to the benefits of the
ownership of the non-controlling interest, then the acquisition is
deemed to reflect 100% ownership and no non-controlling interest is
recognised. A liability is recorded for the expected future
acquisition of the non-controlling interest, and is recognised as
part of the fair value of the consideration. Where the written put
and call option has an embedded valuation mechanism to reward and
retain key individuals employed by the acquired business, who are
also non-controlling shareholders, then the expected increase in
the financial liability is charged to the income statement as
employment costs evenly over the option period within
non-underlying items. See note 1.22 for further details.
On a transaction-by-transaction basis, the Group elects to
measure non-controlling interests, which have both present
ownership interests and are entitled to a proportionate share of
net assets of the acquiree in the event of liquidation, either at
its fair value or at its proportionate interest in the recognised
amount of the identifiable net assets of the acquiree at the
acquisition date. All other non-controlling interests are measured
at their fair value at the acquisition date.
Acquisitions prior to 26 March 2010 (date of adoption of
IFRS)
IFRS 1 grants certain exemptions from the full requirements of
Adopted IFRS for first time adopters. In respect of acquisitions
prior to 26 March 2010, goodwill is included on the basis of its
deemed cost.
1.14 Acquisitions and disposals of non-controlling interests
Acquisitions and disposals of non-controlling interests that do
not result in a change of control are accounted for as transactions
with owners in their capacity as owners and therefore no goodwill
is recognised as a result of such transactions. The adjustments to
non-controlling interests are based on a proportionate amount of
the net assets of the subsidiary. Any difference between the price
paid or received and the amount by which non-controlling interests
are adjusted is recognised directly in equity and attributed to the
owners of the parent.
1.15 Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost is based on the weighted average cost principle and
includes expenditure incurred in acquiring the inventories,
production or conversion costs and other costs in bringing them to
their existing location and condition, less rebates and
discounts.
Provision is made against specific inventory lines where market
conditions identify an issue in recovering the full cost of that
SKU (Stock Keeping Unit). The provision focuses on the age of
inventory and the length of time it is expected to take to sell,
and applies a progressive provision against the gross inventory
based on the numbers of days stock on hand. Where necessary,
further specific provision is made against inventory lines, where
the calculated provision is not deemed sufficient to carry the
inventory at net realisable value.
To the extent that the ageing profile of gross inventory as
calculated by this provision methodology results in a material
provision, it will be disclosed as an estimate that may have an
impact on subsequent periods. To the extent this is material, it
will be disclosed in note 1.22.
Notes (forming part of the financial statements) continued
1 Significant accounting policies (continued)
1.16 Impairment excluding inventories and deferred tax assets
Financial assets (including receivables)
Measurement of ECLs and definition of default
ECLs are a probability-weighted estimate of credit losses.
Credit losses are measured as the present value of all cash
shortfalls (i.e. the difference between the cash flows due to the
entity in accordance with the contract and the cash flows that the
Company expects to receive). ECLs are discounted at the effective
interest rate of the financial asset.
The definition of default is applicable to intercompany and
related party receivables, but not relevant to trade receivables
where the lifetime expected credit loss is considered. The Group
defines default based on both qualitative and quantitative risk
criteria. The Company considers a Joint Venture operating loan
asset to be in default when the underlying veterinary practice is
significantly under-performing against its business plan. Each
practice is reviewed against this set of criteria and their
appropriate risk weightings on an ongoing basis by management.
Practices categorised within the high and medium credit risk
categories are those considered to be in default, with the former
category including those that have the highest loss given default
due to their score card performance. Those within the low credit
risk category are not deemed to be in default. The Company
considers other intercompany and related party assets to be in
default when the entity does not have the forecasted future funds
available to repay the balance, if recalled.
Credit-impaired financial assets
At each reporting date, the Company assesses whether financial
assets carried at amortised cost and debt securities at FVOCI are
credit-impaired. A financial asset is 'credit-impaired' when one or
more events that have a detrimental impact on the estimated future
cash flows of the financial asset have occurred.
Write-offs
The gross carrying amount of a financial asset is written off
(either partially or in full) to the extent that there is no
realistic prospect of recovery.
Details of these provisions are explained in note 1.22 and in
note 17.
Non-financial assets
The carrying amounts of the Group's non-financial assets, other
than inventories and deferred tax assets, are reviewed at each
reporting date to determine whether there is any indication of
impairment. If any such indication exists, then the asset's
recoverable amount is estimated. For goodwill, and intangible
assets that have indefinite useful lives or that are not yet
available for use, the recoverable amount is estimated each period
at the same time.
The recoverable amount of an asset or cash-generating unit is
the greater of its value in use and its fair value less costs to
sell. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money
and the risks specific to the asset. For the purpose of impairment
testing, assets that cannot be tested individually are grouped
together into the smallest group of assets that generates cash
inflows from continuing use that are largely independent of the
cash inflows of other assets or groups of assets (the
'cash-generating unit'). The goodwill acquired in a business
combination, for the purpose of impairment testing, is allocated to
cash-generating units ('CGUs'). Subject to an operating segment
ceiling test, for the purposes of goodwill impairment testing, CGUs
to which goodwill has been allocated are aggregated so that the
level at which impairment is tested reflects the lowest level at
which goodwill is monitored for internal reporting purposes.
Goodwill acquired in a
business combination is allocated to groups of CGUs that are
expected to benefit from the synergies of the combination.
An impairment loss is recognised if the carrying amount of an
asset or its CGU exceeds its estimated recoverable amount.
Impairment losses are recognised in profit or loss. Impairment
losses recognised in respect of CGUs are allocated first to reduce
the carrying amount of any goodwill allocated to the units, and
then to reduce the carrying amounts of the other assets in the unit
(group of units) on a pro rata basis.
An impairment loss in respect of goodwill is not reversed. In
respect of other assets, impairment losses recognised in prior
periods are assessed at each reporting date for any indications
that the loss has decreased or no longer exists. An impairment loss
is reversed if there has been a change in the estimates used to
determine the recoverable amount. An impairment loss is reversed
only to the extent that the asset's carrying amount does not exceed
the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been
recognised.
Notes (forming part of the financial statements) continued
1 Significant accounting policies (continued)
1.17 Employee benefits
Defined contribution plans
A defined contribution plan is a post-employment benefit plan
under which the Company pays fixed contributions into a separate
entity and will have no legal or constructive obligation to pay
further amounts. Obligations for contributions to defined
contribution pension plans are recognised as an expense in the
income statement in the periods during which services are rendered
by employees.
Short term benefits
Short term employee benefit obligations are measured on an
undiscounted basis and are expensed as the related service is
provided. A liability is recognised for the amount expected to be
paid under short term cash bonus or profit-sharing plans if the
Group has a present legal or constructive obligation to pay this
amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
Share based payments
A number of employees of the Company's subsidiaries (including
Directors) receive an element of remuneration in the form of share
based payments, whereby employees render services in exchange for
shares in Pets at Home Group Plc or rights over shares.
Share based payments are measured at fair value at the date of
grant. The fair value of transactions involving the granting of
shares is determined by the share price at the date of grant. The
fair value of transactions involving the granting of share options
is calculated by an external valuer based on a binomial model. In
valuing share based payments, no account is taken of any
performance conditions, other than conditions linked to the price
of the shares of Pets at Home Group Plc ('market conditions').
The cost of share based payments is recognised, together with a
corresponding increase in equity, on a straight-line basis over the
vesting period based on the Company's estimate of how many of the
awards will eventually vest. No expense is recognised for awards
that do not ultimately vest, except for awards where vesting is
conditional upon a market condition, which are treated as vesting
irrespective of whether or not the market condition is satisfied,
provided that all other performance conditions are satisfied.
Where the terms of a share based payment award are modified, as
a minimum, an expense is recognised as if the terms had not been
modified. In addition, an expense is recognised for any increase in
the value of the transaction as a result of the modification, as
measured at the date of the modification.
Where a share based payment award is cancelled, it is treated as
if it had vested on the date of cancellation and any expense not
yet recognised for the award is recognised immediately. However, if
a new award is substituted for the cancelled award, and designated
as a replacement award on the date that it is granted, the
cancelled and new awards are treated as if they were a modification
to the original award, as described in the previous paragraph. The
dilutive effect of outstanding options is reflected as additional
share dilution in the computation of diluted earnings per
share.
Employee Benefit Trust
T he assets and liabilities of the Employee Benefit Trust (EBT)
have been included in the Group and Company accounts. The assets of
the EBT are held separately from those of the Company. Neither the
purchase nor sale of own shares leads to a gain or loss being
recognised in the Group consolidated statement of comprehensive
income.
Investments in the Company's own shares held by the EBT are
presented as a deduction from reserves and the number of such
shares is deducted from the number of shares in issue when
calculating the diluted earnings per share. The trustees of the
holdings of Pets at Home Group Plc shares under the Pets at Home
Group Employee Benefit Trust have waived or otherwise foregone any
and all dividends paid.
1.18 Provisions
A provision is recognised in the balance sheet when the Group
has a present legal or constructive obligation as a result of a
past event, that can be reliably measured and it is probable that
an outflow of economic benefits will be required to settle the
obligation. Provisions are determined by discounting the expected
future cash flows at a pre-tax rate that reflects risks specific to
the liability.
Notes (forming part of the financial statements) continued
1 Significant accounting policies (continued)
1.19 Revenue and cost of sales
Revenue represents the total amount receivable for goods and
services, net of discounts, coupons, returns and excluding value
added tax, sold in the ordinary course of business, and arises from
activities in the United Kingdom.
Revenue is recognised when the Group transfers control of goods
or services to a customer at the amount to which the Group expects
to be entitled. Depending on whether certain criteria are met,
revenue is recognised either over time, in a manner that best
reflects the Group's performance, or at a point in time, when
control of the goods or services is transferred to the
customer.
Sale of goods in-store and online
Retail revenue from the sale of goods is recorded net of value
added tax, colleague discounts, coupons, vouchers, returns and the
free element of multi-save transactions. Sale of goods represents
food and accessories sold in-store and online, with revenue
recognised at the point the customer obtains control of the goods,
which is when the transaction is completed in-store and at point of
delivery to the customer for online orders. Revenue is adjusted to
account for estimates for anticipated returns and a provision is
recognised within trade and other payables. Estimates for
anticipated returns are calculated using past data for both
in-store and online transactions. No separate asset has been
recognised (with no corresponding adjustment to cost of sales) in
relation to the value of products to be recovered from the customer
as the products are not always in a resalable condition.
Gift vouchers and cards
Revenue from the sale of gift vouchers and cards is deferred
until the voucher is redeemed. In line with IFRS 15 the value of
revenue deferred is based on expected redemption rates. The Group
continues to assess the appropriateness of the expected redemption
rates against actual redemptions.
VIP loyalty scheme
Under the VIP loyalty scheme, points are earned by customers
upon the purchase of goods and services. These points can be
converted by nominated charities into gift cards for redemption
against goods and services in-store and online. The sales value of
the points earned under the VIP scheme are treated as deferred
income; the sales are only recognised once the points have been
redeemed by the charities. The points do not expire and have no
value to the customer.
Subscription orders
Revenue for subscription orders is recognised at the point of
delivery of each incremental order to the customer. Subscription
services primarily relate to the repeat order of flea and worm
products sold online and in-store.
Provision of services
Revenue from the provision of services is recorded net of value
added tax, colleague discounts, coupons and vouchers. Provision of
services represents veterinary group income, grooming revenue and
insurance commissions, with revenue recognised upon provision of
the service to the customer.
i) Veterinary group income
Veterinary group income represents revenue from the provision of
veterinary services (from specialist referral centres and managed
First Opinion veterinary practices) and income from the provision
of administrative support services to Joint Venture veterinary
practices. Revenue received for the provision of veterinary
services is recognised at the point of provision of the service and
is recognised net of value added tax, colleague discounts, coupons
and vouchers. Fee income received from the Joint Venture veterinary
practice companies for administrative support services is
recognised in the period the services relate to and recorded net of
value added tax.
In accordance with IFRS 15, revenue for the period ended 26
March 2020 excludes certain fee income, on the basis of increased
uncertainty of recoverability. This relates to fee income from
Joint Venture veterinary practices in which the Group had announced
the intention to buy out the 'A' shares from the Joint Venture
Partners, or where the Group has recognised an operating loan as
being in default (as explained in note 1.16). This is recognised
from the point at which the default event was recognised until the
point at which the buyout was completed (at which point the
practice was consolidated, see note 1.4). Further details in
relation to the income received from Joint Venture veterinary
practices are disclosed in note 27.
Revenue derived from care plans is recognised on an apportioned
basis relative to delivery of the service. Revenue on annual
'Complete Care' plans is deferred and recognised at the point at
which treatment and/or services are provided against the plan at an
amount that reflects the consideration to which the entity expects
to be entitled in exchange for those goods or services. Once the
plan has expired, any un-utilised deferred revenue will be
recognised as revenue. Revenue from 'Vac4Life' plans is deferred
when payment is received and then recognised in reducing
proportions over the first three years of the plan when
vaccinations/boosters are provided.
Rental income received from in-store Joint Venture veterinary
practices is disclosed within note 3 and is categorised as a credit
within selling and distribution expenses.
ii) Grooming revenue
Grooming revenue is recognised net of value added tax, colleague
discounts, coupons and vouchers, at the point of provision of the
service to the customer. Deposits received are deferred until the
grooming service has been performed.
iii) Insurance commissions
Insurance commissions are recognised on a pro-rated basis over
the period the insurance policy relates to.
Accrued income
Accrued income relates to income in relation to fees to Joint
Venture veterinary practices, revenues generated through specialist
referral centres, and overrider and promotional income from
suppliers which has not yet been invoiced . Accrued income has been
classified as current as it is expected to be invoiced and received
within twelve months of the period end. Supplier income is
recognised on an accruals basis, based on the expected entitlement
that has been earned up to the balance sheet date for each relevant
supplier contract.
Cost of sales
Cost of sales includes costs of goods sold and other directly
attributable costs, promotional income and rebate income received
from suppliers, including costs to deliver administrative support
services to Joint Venture veterinary practices and costs to deliver
grooming services.
Notes (forming part of the financial statements) continued
1 Significant accounting policies (continued)
1.19 Revenue and cost of sales (continued)
Non-underlying items
Income or costs considered by the Directors to be non-underlying
are disclosed separately to facilitate year on year comparison of
the underlying trade of the business. The Directors consider that
changes to the fair value of the put and call liabilities warrant
separate disclosure due to the nature of these arrangements as they
do not relate to the underlying trade of the business.
Alternative Performance Measures
The Directors measure the performance of the Group based on a
range of financial measures, including measures not recognised by
EU-adopted IFRS. These alternative performance measures may not be
directly comparable with other companies' alternative performance
measures and the Directors do not intend these to be a substitute
for, or superior to, IFRS measures. Further information can be
found in the Glossary on page 96.
Supplier income
A number of different types of supplier income are negotiated
with suppliers via the joint business planning process in
connection with the purchase of goods for resale, the largest of
which being overrider income and promotional income, which is
explained below. The supplier income arrangements are typically not
co-terminus with the Group's financial period, instead running
alongside the calendar year. Such income is only recognised when
there is reasonable certainty that the conditions for recognition
have been met by the Group, and the income can be measured reliably
based on the terms of the contract. This income is recognised as a
credit within gross margin to cost of sales and, to the extent that
the rebate relates to unsold stock purchases, as a reduction in the
cost of inventory.
Supplier income is recognised on an accruals basis, based on the
expected entitlement that has been earned up to the balance sheet
date for each relevant supplier contract. The accrued incentives,
rebates and discounts receivable at year end are included within
trade and other receivables.
Given the presence of the joint business plans, on the basis of
the historic recoverability of accrued balances, and as amounts are
typically agreed with suppliers prior to recognition, supplier
income is not considered to be an area of significant estimation
that could impact on the following financial year.
Supplier income comprises:
Overrider income
Overrider income comprises three main elements:
1. Fixed percentage based income: These relate largely to
volumetric rebates based on the joint business plan agreements with
suppliers. The income accrued is based on the Group's latest
forecast volumes and the latest contract agreed with the supplier.
Income is not recognised until the Group has reasonable certainty
that the joint business agreement will be fulfilled, with the
amount of income accrued regularly re-assessed and re-measured
throughout the contractual period, based on actual performance
against the joint business plan.
2. Fixed lump sum income: These are typically guaranteed lump
sum payments made by the supplier and are not based on volume.
Fixed lump sum income is usually predicated on confirmation of a
supplier contract and typically includes performance conditions
upon the Group, such as marketing and promotional campaigns. These
amounts are recognised periodically when contractual milestones
have been met such as the promotion being run or marketing in
store.
3. Growth income: These are tiered volumetric rebates relating
to growth targets agreed with the supplier in the joint business
planning process. These are retrospective rebates based on sales
volumes or purchased volumes. Income is recognised to the extent
that it is reasonably certain that the conditions will be achieved,
with such certainty increasing in the latter part of the calendar
year.
Promotional income
Promotional income relates to supplier funded rebates specific
to promotional activity run in agreement between the Group and its
suppliers. Rebates are agreed at an individual inventory article
level for agreed periods of time and are systemically calculated
based on article sales information. No estimation is applied in
calculating the promotional income receivable.
Supplier income is recognised on an accruals basis, based on the
expected entitlement that has been earned up to the balance sheet
date for each relevant supplier contract. The accrued incentives,
rebates and discounts receivable at year end are included within
trade and other receivables.
1.20 Expenses
Financing income and expenses
Financing expenses comprise interest payable under the effective
interest rate method, incorporating amortisation of loan
arrangement fees, finance charges on shares classified as
liabilities, unwinding of the discount on provisions , interest on
lease liabilities and net foreign exchange losses that are
recognised in the income statement (see foreign currency accounting
policy). Borrowing costs that are directly attributable to the
acquisition, construction or production of an asset that takes a
substantial time to be prepared for use, are capitalised as part of
the cost of that asset. Financing income comprises interest
receivable on funds invested, dividend income, and net foreign
exchange gains.
Interest income and interest payable is recognised in profit or
loss as it accrues, using the effective interest method. Dividend
income is recognised in the income statement on the date the
entity's right to receive payment is established. Foreign currency
gains and losses are reported on a net basis.
Notes (forming part of the financial statements) continued
1 Significant accounting policies (continued)
1.21 Taxation
Tax on the profit or loss for the period comprises current and
deferred tax. Tax is recognised in the income statement except to
the extent that it relates to items recognised directly in equity,
in which case it is recognised in equity.
Current tax is the expected tax payable or receivable on the
taxable income or loss for the period, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment
to tax payable in respect of previous periods.
Deferred tax is provided on temporary differences between the
carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for taxation purposes. The following
temporary differences are not provided for: the initial recognition
of goodwill; the initial recognition of assets or liabilities that
affect neither accounting nor taxable profit other than in a
business combination; and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in
the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the
carrying amount of assets and liabilities, using tax rates enacted
or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against
which the temporary difference can be utilised.
1.22 Accounting estimates and judgements
The preparation of consolidated financial statements in
conformity with IFRS requires management to make judgements,
estimates and assumptions concerning the future that affect the
application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. These judgements are
based on historical experience and management's best knowledge at
the time and the actual results may ultimately differ from these
estimates. Estimates and underlying assumptions are reviewed on an
on-going basis and revisions to accounting estimates are recognised
in the period in which the estimates are revised and in any future
periods affected.
The estimates and assumptions that have significant risk of
causing a material adjustment to the carrying value of assets and
liabilities are explained below.
Impairment of goodwill and other intangibles (significant
estimate)
Determining whether goodwill and other intangibles are impaired
requires an estimation of the value in use of the cash-generating
units to which goodwill and other intangible assets have been
allocated. The value in use calculation requires estimation of
future cash flows expected to arise from the cash-generating unit
(CGU) and a suitable discount rate in order to calculate present
value. Details of CGUs as well as further information about the
assumptions made are disclosed in note 13. The Group consider that
no reasonably possible change in assumptions underlying the
carrying value of the goodwill and intangibles would result in an
impairment within the next 12 months. Therefore, the carrying value
of goodwill and intangibles is not considered a significant
estimate as at 26 March 2020.
Joint Venture receivables (significant estimate)
The Group provides longer term operating loans and other loans
to a number of Joint Venture veterinary practices as detailed in
notes 16, 17 and 27 to support their working capital requirements.
The loans advanced to the practices are interest free and either
repayable on demand or repayable within 90 days of demand. As
detailed in these notes, provisions for expected credit losses are
held in respect of operating and other loans to Joint Venture
veterinary practices. In line with IFRS 9, judgement is applied in
determining expected credit losses on these receivables, the
qualitative and quantitative risk-related criteria used to assess
default and therefore also the probability of default (as defined
in note 1.16), and in estimating an appropriate 'loss given
default' percentage to apply to each loan. In assessing the
qualitative and quantitative information, the Group takes into
account factors including current performance against business
plan, availability of suitable personnel to operate effectively,
and level of indebtedness. The revenue, profit, and cash flow
expectations of the practices are taken into account in determining
the length of time that the practice is expected to take in order
to repay the loans. This is also the period over which losses are
estimated should default occur within the contractual period. The
provision for expected credit loss is based on forward-looking
information, taking into account expected credit losses giving due
consideration to the Joint Venture's business plan, as well as
macro-economic factors such as growth in the size of the veterinary
market, availability of veterinary practitioners and cost inflation
within the industry. The quantum of Joint Venture receivables and
provision made against these receivables is disclosed in notes 16,
17 and 27.
Assessment of control with regard to Joint Ventures (significant
judgement)
The Group has assessed, and continually assesses whether the
level of an individual Joint Venture veterinary practices'
indebtedness to the Group, particularly those with high levels of
indebtedness, implies that the Group has the practical ability to
control the Joint Venture, which would result in the requirement to
consolidate. In making this judgement, the Group reviewed the terms
of the Joint Venture agreement and the question of practical
ability, as a provider of working capital to control the activities
of the practice. This included consideration of barriers to the
Group's ability to exercise such practical or other control which
include difficulty in replacing Joint Venture Partners due to the
shortage of veterinarians in the UK and reputational damage within
the veterinary network should the Group attempt to exercise
control, as well as potential barriers to the Joint Venture Partner
exercising their own power over the activities of the practice. We
note that under the terms of the Joint Venture agreement, the
partners run their practices with complete operational and clinical
freedom. The Group is satisfied that on the balance of evidence
from the Group's experience as shareholder and provider of working
capital support to the practices, it does not have the current
ability to exercise control over those practices to which operating
loans are advanced, and therefore non consolidation is
appropriate.
Notes (forming part of the financial statements) continued
1 Significant accounting policies (continued)
1.22 Accounting estimates and judgements (continued)
Put and call options (significant estimate)
The Group recognises put and call options over non-controlling
interests (NCI) in its subsidiary undertakings as a liability in
the consolidated balance sheet. The nature of the Group's option
agreements are such that there is an element that is a minimum
amount and a growth element to reward and retain key individuals
employed by the acquired business who are also non-controlling
shareholders which is linked to improvements in the results of the
acquired business. The growth element would be forfeited under
certain conditions by the NCI, including if they ceased to be
employed by the Group.
Upon initial recognition, the minimum amount is recognised as a
liability at fair value, which is estimated as the present value of
the future exercise price based upon the fair value of the business
at acquisition. For the growth element, the expected amount is
charged to the income statement as employment costs over the option
period within non-underlying items. The financial liability is
valued based on management's best estimate of the future pay out,
which is based on the estimated future earnings. The charge is
spread over the financial years before the put and call can be
exercised for the first time.
The Group consider that no reasonably possible change in
assumptions underlying the carrying value of the put and call
options would result in a material range of estimation uncertainty
in the next 12 months. Therefore, the carrying value of the options
is not considered a significant estimate as at 26 March 2020.
Carrying value of inventory (significant estimate)
A provision is made for those items of inventory where the net
realisable value is estimated to be lower than cost. Net realisable
value is based on both historical experience and assumptions
regarding future selling values and disposal channels, and is
consequently a source of estimation uncertainty. At 26 March 2020
the inventory provision amounted to GBP3.2m (28 March 2019:
GBP2.6m). The value of inventory against which an ageing provision
is held is GBP7.1m (28 March 2019: GBP7.1m). Management consider
the range of reasonably possible estimation uncertainty to be
immaterial given the value of the provision, the value of inventory
against which the provision is held, and the degree of historical
accuracy in the provisioning policy. Therefore, the carrying value
of inventory is not considered a significant estimate as at 26
March 2020.
IFRS 16 Leases (significant judgement)
Under IFRS 16, the Group recognises a right-of-use asset
representing its right to use the underlying asset and a lease
liability representing its obligation to make lease payments. The
lease liability is initially measured at the present value of the
remaining lease payments, discounted using the Group's incremental
borrowing rate, adjusted to take into account the risk associated
with the length of the lease which ranges between 1 and 27 years
and the location of the lease. The Group has therefore made a
judgement to determine the incremental borrowing rate used. As a
result of the significant impact the transition to IFRS 16 has had
on the Group's opening balance sheet (GBP473.1m right of use asset
and GBP506.2m lease liability recognised as at 29 March 2019), the
discount rate is considered to be a significant judgement. The
discount rate applied ranges between 2.3% and 3.3% dependent on the
length of the lease term. The length of the lease term is based on
the contractual right to utilise the asset and is not considered to
involve a significant level of judgement because the Group has not
taken into account break clauses unless they have been
approved.
1.23 Dividends
Final dividends are recognised in the Group's financial
statements as a liability in the period in which the dividends are
approved by shareholders such that the Company is obliged to pay
the dividend. Interim equity dividends are recognised in the period
in which they are paid.
Notes (forming part of the financial statements) continued
2 Segmental Reporting
The Group has two reportable segments, Retail and Vet Group,
which are the Group's strategic business units. The Group's
operating segments are based on the internal management structure
and internal management reports, which are reviewed by the
Executive Directors on a periodic basis. The Executive Directors
are considered to be the Chief Operating Decision Makers
The Group is a pet care business with the strategic advantage of
being able to provide products, services and advice, addressing all
pet owners' needs. Within this strategic umbrella, the Group has
two reportable segments, Retail and Vet Group, which are the
Group's strategic business units, and a central support function.
The strategic business units offer different products and services,
are managed separately and require different operational and
marketing strategies.
The operations of the Retail reporting segment comprise the
retailing of pet products purchased online and in-store, pet sales,
grooming services and insurance products. The operations of the Vet
Group reporting segment comprise First Opinion practices and
specialist referral centres. Central includes group costs and
finance expenses. Revenue and costs are allocated to a segment
where reasonably possible.
The following summary describes the operations in each of the
Group's reportable segments. Performance is measured based on
segment operating profit as included in the management reports that
are reviewed by the Executive Directors. These internal reports are
prepared in accordance with IFRS accounting policies consistent
with these financial statements. All material operations of the
reportable segments are carried out in the UK and all revenue is
from external customers.
52 week period ended 26 March 2020
----------------------------------- -------------------------------------------
Retail Vet Group Central Total
Income statement GBPm GBPm GBPm GBPm
----------------------------------- ------ ----------- ------------- -------
Revenue 937.6 121.2 - 1,058.8
Gross profit 466.2 51.7 - 517.9
Underlying operating profit/(loss) 89.3 30.6 (8.6) 111.3
Non-underlying items - (7.6) - (7.6)
------------------------------------- ------ ----------- ------------- -------
Segment operating profit/(loss) 89.3 23.0 (8.6) 103.7
Net financing (expense) (13.3) (0.3) (4.2) (17.8)
Profit/(loss) before tax 76.0 22.7 (12.8) 85.9
------------------------------------- ------ ----------- ------------- -------
IFRS 16 has been adopted during the period ended 26 March 2020
and has had a significant impact on the Group's income statement.
Further details of the impact of transition to IFRS 16 have been
disclosed in notes 12 and 29.
The share based payment charge recognised in the statement of
changes in equity is split across the 3 segments listed in the
above table.
Non-underlying operating expenses in the periods ended 26 March
2020 and 28 March 2019 are explained in note 3.
52 week period ended 28 March 2019
----------------------------------- ------------------------------------------
Retail Vet Group Central Total
Income statement GBPm GBPm GBPm GBPm
----------------------------------- ------ ----------- ------------- ------
Revenue 854.6 106.4 - 961.0
Gross profit 435.8 51.1 - 486.9
Underlying operating profit/(loss) 67.2 32.1 (6.1) 93.2
Non-underlying items 0.5 (40.6) - (40.1)
------------------------------------- ------ ----------- ------------- ------
Segment operating profit/(loss) 67.7 (8.5) (6.1) 53.1
Net financing income/(expense) 0.3 0.3 (4.1) (3.5)
Profit/(loss) before tax 68.0 (8.2) (10.2) 49.6
------------------------------------- ------ ----------- ------------- ------
Notes (forming part of the financial statements) continued
2 Segmental Reporting (continued)
52 week period ended 26 March 2020
----------------------------------- -----------------------------------------
Reconciliation of EBITDA before Retail Vet Group Central Total
non-underlying items GBPm GBPm GBPm GBPm
----------------------------------- --------- ------------- -------- -----
Underlying operating profit/(loss) 89.3 30.6 (8.6) 111.3
Depreciation of property, plant
and equipment 25.8 2.5 - 28.3
Depreciation of right-of-use
assets 69.0 2.1 - 71.1
Amortisation of intangible
assets 9.5 0.5 - 10.0
------------------------------------- --------- ------------- -------- -----
Underlying EBITDA 193.6 35.7 (8.6) 220.7
------------------------------------- --------- ------------- -------- -----
52 week period ended 28 March 2019
----------------------------------- -----------------------------------------
Reconciliation of EBITDA before Retail Vet Group Central Total
non-underlying items GBPm GBPm GBPm GBPm
----------------------------------- --------- ------------- -------- -----
Underlying operating profit/(loss) 67.2 32.1 (6.1) 93.2
Depreciation of property, plant
and equipment 26.7 1.8 - 28.5
Depreciation of right-of-use - - - -
assets
Amortisation of intangible
assets 7.6 0.7 - 8.3
------------------------------------- --------- ------------- -------- -----
Underlying EBITDA 101.5 34.6 (6.1) 130.0
------------------------------------- --------- ------------- -------- -----
EBITDA before non-underlying items is defined on page 96.
52 week period ended 26 March 2020
------------------------------ --- --- ----------------------------------------
Segmental revenue analysis Retail Vet Group Central Total
by revenue stream GBPm GBPm GBPm GBPm
------------------------------ --- --- ------- ------------- ------- -------
Retail - Food 517.4 - - 517.4
Retail - Accessories 375.3 - - 375.3
Retail - Services 44.9 - - 44.9
Vet Group - First Opinion fee
income - 53.8 - 53.8
Vet Group - Company managed
practices - 21.6 - 21.6
Vet Group - Other income - 6.2 - 6.2
Vet Group - Specialist - 39.6 - 39.6
---------------------------------------- ------- ------------- ------- -------
Total 937.6 121.2 - 1,058.8
---------------------------------------- ------- ------------- ------- -------
52 week period ended 28 March 2019
------------------------------ --- --- ----------------------------------------
Segmental revenue analysis Retail Vet Group Central Total
by revenue stream GBPm GBPm GBPm GBPm
------------------------------ --- --- ------- ------------- ------- -------
Retail - Food 455.4 - - 455.4
Retail - Accessories 357.0 - - 357.0
Retail - Services 42.2 - - 42.2
Vet Group - First Opinion fee
income - 52.6 - 52.6
Vet Group - Company managed
practices - 8.1 - 8.1
Vet Group - Other income - 8.7 - 8.7
Vet Group - Specialist - 37.0 - 37.0
---------------------------------------- ------- ------------- ------- -------
Total 854.6 106.4 - 961.0
9
-------------------------------------- ------- ------------- ------- -------
Notes (forming part of the financial statements) continued
3 Expenses and auditor's remuneration
Included in operating profit are the following:
52 week 52 week
period period ended
ended 26 28 March
March 2020 2019
GBPm GBPm
---------------------------------------------------------- ----------- -------------
Non-underlying items
Write off and provisions for operating loans, initial
set-up loans, and trading balances with Joint Venture
veterinary practices (0.3) 17.9
Other costs associated with the purchase of Joint Venture
veterinary practices 3.5 22.5
Impairment of right-of-use assets following acquisition
of Joint Venture veterinary practices 1.6 -
Impairment of property, plant & equipment and intangible
assets following acquisition of Joint Venture veterinary
practices 1.8 -
Increase in fair value of put and call liability 1.0 0.4
Closure of Barkers stores - (0.5)
Aborted property and acquisition costs - (0.2)
----------- -------------
Total non-underlying items 7.6 40.1
Underlying items
Impairment losses on receivables 0.9 2.9
Depreciation of property plant and equipment 28.3 28.5
Amortisation of intangible assets 10.0 8.3
Depreciation of right-of-use assets 71.1 -
Interest on lease liabilities 14.0 -
Rentals under operating leases:
Hire of plant and machinery - 5.0
Property - 76.9
Expenses relating to short-term leases(1) 0.1 0.1
Other income
Rental income from sub-leasing right-of-use assets to
third parties(2) (0.3) (1.0)
Rental income from related parties(2) (7.4) (7.9)
Share based payment charges 4.2 3.5
---------------------------------------------------------- ----------- -------------
(1) The comparative numbers have been restated to enhance
comparability(.)
(2) This other income is presented within selling and
distribution expenses(.)
During the periods ended 26 March 2020 and 28 March 2019, the
Group completed a review and recalibration exercise of the First
Opinion veterinary practices. As part of this review, the Group has
completed a buy out of the 'A' shares from the Joint Venture
Partners in a total of 51 Joint Venture veterinary practices; with
24 of these occurring in the 52 week period ended 26 March 2020. In
addition, the Group acquired a total of 9 further practices which
did not form part of this review, with 4 of these occurring in the
period ended 26 March 2020.
The non-underlying operating expenses in the period ended 26
March 2020 of GBP7.6m relate to:
- (GBP0.3m) in relation to the release of allowances for
expected credit losses for operating loans, initial set-up loans,
and trading balances to Joint Venture veterinary practices which
were provided for under IFRS 9 by the Group in the period ended 28
March 2019. At 26 March 2020, all of the outstanding loans with
these practices have been written off resulting in a balance of
GBPnil on the balance sheet.
- GBP3.5m in relation to exit and closure costs (provided for
under IAS 37) payable in relation to Joint Venture veterinary
practices which the Group has acquired. The release of negative
goodwill and impairment of goodwill arising on the acquisition of
the Joint Venture veterinary practices, as detailed in note 10, has
been included within these costs. This balance includes GBP0.2m in
relation to the profit from the disposal of assets acquired in the
52 week period ended 28 March 2019.
- GBP1.6m in relation to the write down of right-of-use assets
to their expected recoverable amount, relating to First Opinion
veterinary practices acquired in the period with the intention of
being closed. Further details are disclosed in note 12.
- GBP1.8m relating to the impairment of property, plant and
equipment and intangible assets relating to the review and
recalibration exercise of the First Opinion veterinary practices.
Further details are disclosed in notes 11 and 13.
- GBP1.0m of non-underlying operating expenses relate to an
increase in the financial liability for put and call options over
shares held by clinicians in Dick White Referrals Limited and
Veterinary Specialists (Scotland) Limited. The charge represents an
increase in the equity 'option' value held by those clinicians
based on the Director's best estimate of the future settlement on
exercise of the put and call. The charge is classified within
operating expenses as a clinician is required to remain an employee
of the Group in order to access the full equity value of the option
at the time of the exercise.
Income or costs considered by the Directors to be non-underlying
are disclosed separately to facilitate year on year comparison of
the underlying trade of the business. The Directors consider that
changes to the fair value of the put and call liabilities warrant
separate disclosure due to the nature of these arrangements as they
do not relate to the underlying trade of the business.
Notes (forming part of the financial statements) continued
3 Expenses and auditor's remuneration (continued)
The non-underlying operating expenses in the period ended 28
March 2019 of GBP40.1m related to:
- GBP17.9m in relation to the write off and provision for
operating loans, initial set-up loans, and trading balances (made
by the Group) to Joint Venture veterinary practices, which are no
longer expected to be recoverable, and therefore which were
provided for under IFRS 9. In total GBP12.7m of loans and
receivables were written off in the year in relation to Joint
Venture veterinary practices that have been acquired by the Group.
The balance of GBP5.2m was held within provisions against
receivables.
- GBP22.5m in relation to provisions against payments to third
parties for bank loans, overdrafts and lease obligations (provided
for under IFRS 9) and associated exit and closure costs (provided
for under IAS 37) payable in relation to Joint Venture veterinary
practices which the Group acquired. The release of negative
goodwill and impairment of goodwill arising on the acquisition of
the Joint Venture veterinary practices, as detailed in note 10, was
included within these costs. At 28 March 2019, GBP8.6m had been
incurred, and GBP5.4m was included within provisions in note 21
under IFRS 9, whilst GBP8.5m was included within provisions in note
21 under IAS 37.
- GBP0.4m of non-underlying operating expenses related to an
increase in the financial liability for put and call options over
shares held by clinicians in Dick White Referrals Limited and
Anderson Moores Veterinary Specialists Limited. The charge
represented an increase in the equity 'option' value held by those
clinicians based on the Board's best estimate of the future
settlement on exercise of the put and call.
- Release of GBP0.5m in relation to a provision which was
created in the period ended 29 March 2018 associated with the
closure of seven trial Barkers stores.
- Release of GBP0.2m of provisions which were created in the
period ended 29 March 2018 associated with aborted property and
acquisition costs.
Auditor's remuneration
52 week
52 week period period ended
ended 26 28 March
March 2020 2019
GBPm GBPm
------------------------------------------------------------ -------------
Audit of the parent company financial statements 0.0 0.0
Amounts receivable by the Company's auditor and its
associates in respect of:
Audit of financial statements of subsidiaries pursuant
to legislation 0.4 0.4
Review of interim financial statements 0.1 0.1
All other services 0.0 0.0
-------------------------------------------------------- --- -------------
0.5 0.5
-------------------------------------------------------- --- -------------
Notes (forming part of the financial statements) continued
4 Colleague numbers and costs
The average number of persons employed by the Group (including
Directors) during the period, analysed by category, was as
follows:
52 week 52 week
period period ended
ended 26 28 March
March 2020 2019
Number Number
------------------------------- ----------- -------------
Sales and distribution - FTE 6,432 6,400
Administration - FTE 707 597
------------------------------- ----------- -------------
7,139 6,997
------------------------------- ----------- -------------
Sales and distribution - total 8,506 8,447
Administration - total 1,055 614
------------------------------- ----------- -------------
9,561 9,061
------------------------------- ----------- -------------
The aggregate payroll costs of these persons were as
follows:
52 week 52 week
period period ended
ended 26 28 March
March 2020 2019
GBPm GBPm
---------------------------------------------------- ----------- -------------
Wages and salaries 203.1 187.8
Social security costs 17.5 16.1
Contributions to defined pension contribution plans 6.9 6.2
---------------------------------------------------- ----------- -------------
227.5 210.1
---------------------------------------------------- ----------- -------------
Remuneration of Executive Directors and Executive Management
Team
52 week 52 week
period period ended
ended 26 28 March
March 2020 2019
GBPm GBPm
---------------------------------------------------------- ----------- -------------
Executive Directors' emoluments including social security
costs 1.8 1.9
Non-Executive Directors' emoluments including social
security costs 0.5 0.5
Executive Directors' amounts receivable under share
options 0.0 0.0
Executive Directors' pension contributions 0.1 0.1
---------------------------------------------------------- ----------- -------------
Total Directors' remuneration 2.4 2.5
---------------------------------------------------------- ----------- -------------
Executive Management Team emoluments including social
security costs 2.6 2.7
Executive Management Team amounts receivable under share
options 0.1 0.0
Executive Management Team pension contributions 0.1 0.1
---------------------------------------------------------- ----------- -------------
Total Executive Management Team remuneration 2.8 2.8
---------------------------------------------------------- ----------- -------------
In the opinion of the Board, the key management as defined under
revised IAS 24 Related Party Disclosures are the Executive
Directors and the Executive Management Team. Executive Directors'
emoluments are also included within the Executive Management Team
emoluments disclosed above.
Notes (forming part of the financial statements) continued
5 Earnings per share
Basic earnings per share is calculated by dividing the net
profit for the period attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the
period.
Diluted earnings per share is calculated by dividing the net
profit for the period attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the
period plus the weighted average number of ordinary shares that
would be issued on the conversion of all dilutive potential
ordinary shares into ordinary shares.
52 week period ended 52 week period ended
26 March 2020 28 March 2019
------------------------------------------- --------------------------- --------------------------------
After
Underlying non-underlying Underlying After non-underlying
trading items trading items
------------------------------------------- ---------- --------------- ---------- --------------------
Profit attributable to equity shareholders
of the parent (GBPm) 74.9 67.4 70.4 30.5
------------------------------------------- ---------- --------------- ---------- --------------------
Basic weighted average number of shares 500.0 500.0 500.0 500.0
Dilutive potential ordinary shares 9.6 9.6 5.1 5.1
------------------------------------------- ---------- --------------- ---------- --------------------
Diluted weighted average number of
shares 509.6 509.6 505.1 505.1
------------------------------------------- ---------- --------------- ---------- --------------------
Basic earnings per share 15.0p 13.5p 14.1p 6.1p
Diluted earnings per share 14.7p 13.2p 13.9p 6.0p
------------------------------------------- ---------- --------------- ---------- --------------------
6 Finance income
52 week 52 week
period period
ended 26 ended 28
March 2020 March 2019
GBPm GBPm
--------------------------------------------------------- ----------- -----------
Interest receivable on loans to Joint Venture veterinary
practices 0.4 0.5
Other interest receivable 0.1 0.1
Total finance income 0.5 0.6
--------------------------------------------------------- ----------- -----------
7 Finance expense
52 week 52 week
period period
ended 26 ended 28
March 2020 March 2019
GBPm GBPm
-------------------------------------- ----------- -----------
Bank loans at effective interest rate 4.4 4.1
Interest expense on lease liability 14.0 -
Other interest expense (0.1) 0.0
-------------------------------------- ----------- -----------
Total finance expense 18.3 4.1
-------------------------------------- ----------- -----------
Notes (forming part of the financial statements) continued
8 Taxation
Recognised in the income statement
52 week 52 week
period period
ended 26 ended 28
March 2020 March 2019
GBPm GBPm
------------------------------------------------------ ----------- -----------
Current tax expense
Current period 22.0 20.6
Adjustments in respect of prior periods (0.8) (0.7)
------------------------------------------------------ ----------- -----------
Current tax expense 21.2 19.9
------------------------------------------------------ ----------- -----------
Deferred tax expense
Origination and reversal of temporary differences (3.4) (1.9)
Impact of difference between deferred and current tax
rates 0.2 0.1
Adjustments in respect of prior periods 0.5 1.0
------------------------------------------------------ ----------- -----------
Deferred tax expense (2.7) (0.8)
------------------------------------------------------ ----------- -----------
Total tax expense 18.5 19.1
------------------------------------------------------ ----------- -----------
The UK corporation tax standard rate for the period is 19%
(2019: 19%). A UK corporation tax rate of 19% (effective 1 April
2020) was substantively enacted on 17 March 2020, reversing the
previously enacted reduction in the rate from 19% to 17%. This will
increase the company's future current tax charge accordingly. The
deferred tax liability at 26 March 2020 has been calculated at 19%
(2019: 17%).
Deferred tax recognised in comprehensive income
52 week 52 week
period period
ended 26 ended 28
March 2020 March 2019
GBPm GBPm
-------------------------------------------------------- ----------- -----------
Effective portion of changes in fair value of cash flow
hedges (note 22) (0.9) 0.4
-------------------------------------------------------- ----------- -----------
Reconciliation of effective tax rate
52 week period ended 52 week period ended
26 March 2020 28 March 2019
--------------------------------- ---------------------------------
Underlying Non-underlying Underlying Non-underlying
trading items Total trading items Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------- ---------- -------------- ----- ---------- -------------- -----
Profit for the period 74.9 (7.5) 67.4 70.4 (39.9) 30.5
Total tax expense 18.6 (0.1) 18.5 19.3 (0.2) 19.1
-------------------------------- ---------- -------------- ----- ---------- -------------- -----
Profit excluding taxation 93.5 (7.6) 85.9 89.7 (40.1) 49.6
-------------------------------- ---------- -------------- ----- ---------- -------------- -----
Tax using the UK corporation
tax rate for the period of
19% (52 week period ended
28 March 2019: 19%) 17.8 (1.5) 16.3 17.0 (7.6) 9.4
Impact of difference between
deferred and current tax rates 0.2 - 0.2 0.1 - 0.1
Depreciation on expenditure
not eligible for tax relief 0.9 - 0.9 0.6 - 0.6
Expenditure not eligible for
tax relief 0.1 1.4 1.5 1.3 7.4 8.7
Adjustments in respect of
prior periods (0.4) - (0.4) 0.3 - 0.3
-------------------------------- ---------- -------------- ----- ---------- -------------- -----
Total tax expense 18.6 (0.1) 18.5 19.3 (0.2) 19.1
-------------------------------- ---------- -------------- ----- ---------- -------------- -----
The UK corporation tax standard rate for the 52 week period
ended 26 March 2020 was 19% (52 week period ended 28 March 2019:
19%). The effective tax rate before non-underlying items for the 52
week period ended 26 March 2020 was 20%.
Notes (forming part of the financial statements) continued
9 Dividends paid and proposed
Group and Company
-------------------------
52 week
52 week period period
ended ended
26 March 28 March
2020 2019
GBPm GBPm
-------------------------------------------------------- -------------- ---------
Declared and paid during the period
Final dividend of 5.0p per share (2019: 5.0p per share) 24.8 24.8
Interim dividend of 2.5p per share (2019: 2.5p per
share) 12.3 12.4
-------------------------------------------------------- -------------- ---------
Proposed for approval by shareholders at the AGM
Final dividend of 5.0p per share (2019: 5.0p per share) 24.7 24.8
-------------------------------------------------------- -------------- ---------
The trustees of the following holdings of Pets at Home Group plc
shares under the Pets at Home Group Employee Benefit Trust have
waived or otherwise foregone any and all dividends paid in relation
to the periods ended 26 March 2020 and 28 March 2019 and to be paid
at any time in the future (subject to the exceptions in the
relevant trust deed) on its respective shares for the time being
comprised in the trust funds:
Computershare Nominees (Channel Islands) Limited (holding at 26
March 2020: 5,749,377 shares, holding at 28 March 2019: 4,596,471
shares)
10 Business combinations
Acquisition of Joint Venture veterinary practices
In the 52 week period ended 26 March 2020, the Group has
acquired 100% of the 'A' shares of 28 veterinary practices, which
were previously accounted for as Joint Venture veterinary
practices. These practices were previously accounted for as Joint
Venture veterinary practices as the Group only held 100% of the
non-participatory 'B' ordinary shares, equating to 50% of the total
shares. Acquisition of the 'A' shares has led to the control and
consolidation of these practices. A detailed explanation for the
basis of consolidation can be found in note 1.4.
In the 52 week period ended 26 March 2020, GBP7.1m operating
loans, GBP1.1m initial loans and GBP0.7m other loans relating to
these practices were written off in advance of the acquisitions. In
addition GBP5.9m of bank loans owed by these Joint Venture
veterinary practices were repaid by the Group under the terms of
the bank guarantee in advance of the acquisitions. Further details
of the amounts written off and the utilisation of the provisions
are detailed in notes 16, 17 and 27.
The practices have been categorised into the following
groups:
- Joint Venture veterinary practices acquired with the exchange
of significant cash consideration, with the intention of trading as
a going concern
- Joint Venture veterinary practices acquired without the
exchange of significant cash consideration, with the intention of
trading as a going concern
- Joint Venture veterinary practices acquired without the
exchange of significant cash consideration, with the intention of
being closed
Joint Venture veterinary practices acquired with the exchange of
significant cash consideration, with the intention of trading as a
going concern
In the 52 week period ended 28 March 2019, the entities listed
below were all accounted for as a Joint Venture veterinary practice
where the Group held 100% of the non-participatory 'B' ordinary
shares. A detailed explanation for the basis of consolidation can
be found in note 1.4. On the dates listed below, the Group acquired
100% of the 'A' shares of the practices, leading to control and
consolidation.
Subsidiaries acquired
Total proportion
Proportion of voting
of voting equity equity instruments Cash consideration
Principal instruments owned following transferred
activity Date of acquisition acquired the acquisition GBPm
---------------------- ----------- -------------------- ----------------- -------------------- ------------------
Market Harborough Veterinary
Vets4Pets Limited practice 14 August 2019 50% 100% 0.0
Leicester St Georges Veterinary
Vets4Pets Limited practice 14 August 2019 50% 100% 0.0
Doncaster Vets4Pets Veterinary 5 September
Limited practice 2019 50% 100% 0.2
Companion Care
(Maidstone) Veterinary 17 January
Limited practice 2020 50% 100% 0.4
---------------------- ----------- -------------------- ----------------- -------------------- ------------------
Notes (forming part of the financial statements) continued
10 Business combinations (continued)
Assets acquired and liabilities recognised at the date of
acquisition
The amounts recognised in respect of identifiable assets and
liabilities relating to the acquisitions are as follows. The
acquisition disclosures have been combined as each acquisition is
considered to be individually immaterial to the Group.
Adjustments Fair value
Book value of assets on acquisition of assets and
and GBPm liabilities
liabilities acquired acquired
GBPm GBPm
---------------------------- ------------------------ --------------- --------------
Current assets
Cash and cash equivalents 0.2 - 0.2
Trade and other receivables 0.4 - 0.4
Inventories 0.1 - 0.1
Non-current assets
Intangible assets 0.2 - 0.2
Tangible fixed assets 0.6 (0.3) 0.3
Current liabilities
Bank loans and overdrafts (0.1) - (0.1)
Trade and other payables (0.3) - (0.3)
Net assets 1.1 (0.3) 0.8
------------------------------- --------------------- --------------- --------------
Goodwill arising on acquisition
GBPm
------------------------------------- ------
Consideration 0.6
Less: Fair value of assets acquired (0.8)
------------------------------------- ------
Negative goodwill arising on
acquisition (0.2)
------------------------------------- ------
Release of negative goodwill 0.2
------------------------------------- ------
Carrying value of goodwill -
------------------------------------- ------
Joint Venture veterinary practices acquired without the exchange
of significant cash consideration, with the intention of trading as
a going concern
In the 52 week period ended 26 March 2020 the Group has acquired
the following veterinary practices, which were previously accounted
for as Joint Venture veterinary practices, with the intention of
trading as company managed practices.
Subsidiaries acquired
Total proportion
Proportion of voting equity Cash consideration
of voting instruments owned transferred
Principal equity instruments following the for shares
activity Date of acquisition acquired acquisition GBPm
---------------------- ----------- -------------------- ------------------- ------------------ ------------------
Companion Care (Perth) Veterinary 15 April
Limited practice 2019 50% 100% -
Companion Care
(Stevenage) Veterinary 15 April
Limited practice 2019 50% 100% -
Barnwood Vets4Pets Veterinary 23 April
Limited practice 2019 50% 100% -
Pentland Vets4Pets Veterinary 24 April
Limited practice 2019 50% 100% -
Prescot Vets4Pets Veterinary 2 September
Limited practice 2019 50% 100% -
Leeds Kirkstall
Vets4Pets Veterinary 4 October
Limited practice 2019 50% 100% -
Bearsden Vets4Pets Veterinary 9 October
Limited practice 2019 50% 100% -
---------------------- ----------- -------------------- ------------------- ------------------ ------------------
Notes (forming part of the financial statements) continued
10 Business combinations (continued)
Assets acquired and liabilities recognised at the date of
acquisition
The amounts recognised in respect of identifiable assets and
liabilities relating to the acquisition are as follows. The
acquisition disclosures have been combined as each acquisition is
considered to be individually immaterial to the Group.
Adjustments Fair value
Book value of assets on acquisition of assets and
and GBPm liabilities
liabilities acquired acquired
GBPm GBPm
---------------------------- ------------------------ --------------- --------------
Current assets
Cash and cash equivalents 0.0 - 0.0
Trade and other receivables 0.3 - 0.3
Inventories 0.1 -- 0.1
Non-current assets
Tangible fixed assets 0.6 (0.1) 0.5
Right-of-use assets 0.5 - 0.5
Non-current liabilities
Lease liabilities (0.5) - (0.5)
Current liabilities
Bank loans and overdrafts (0.4) - (0.4)
Trade and other payables (0.4) - (0.4)
Net assets 0.2 (0.1) 0.1
------------------------------- --------------------- --------------- --------------
Goodwill arising on acquisition
GBPm
------------------------------------- ------
Consideration 0.1
Less: Fair value of assets acquired (0.1)
------------------------------------- ------
Goodwill arising on acquisition 0.0
------------------------------------- ------
Impairment of goodwill (0.0)
------------------------------------- ------
Carrying value of goodwill -
------------------------------------- ------
The consideration shown within the table above relates to the
cash settlement of 'A' shareholder Joint Venture Partner loans,
which were repaid to the 'A' shareholder at the point of
acquisition.
Joint Venture veterinary practices acquired without the exchange
of significant cash consideration, with the intention of being
closed
In the 52 week period ended 26 March 2020 the Group has acquired
the following veterinary practices, which were previously accounted
for as Joint Venture veterinary practices. The Group's intention is
to close these practices.
Subsidiaries acquired
Proportion Total proportion
of voting of voting Cash consideration
equity equity instruments transferred
Date of instruments owned following for shares
Principal activity acquisition acquired the acquisition GBPm
------------------ ------------------- ------------------ ----------------- ------------------ ------------------
Companion Care
(Newport) Veterinary 15 April
Limited practice 2019 50% 100% -
Davidsons Mains
Vets4Pets Veterinary 15 April
Limited practice 2019 50% 100% -
Marlborough
Vets4Pets Veterinary 15 April
Limited practice 2019 50% 100% -
Sheldon Vets4Pets Veterinary 15 April
Limited practice 2019 50% 100% -
Thamesmead
Vets4Pets Veterinary 15 April
Limited practice 2019 50% 100% -
Wokingham
Vets4Pets Veterinary 15 April
Limited practice 2019 50% 100% -
Wellingborough
Vets4Pets Veterinary 17 April
Limited practice 2019 50% 100% -
Andover Vets4Pets Veterinary 23 April
Limited practice 2019 50% 100% -
Bonnyrigg
Vets4Pets Veterinary 24 April
Limited practice 2019 50% 100% -
Musselburgh
Vets4Pets Veterinary 24 April
Limited practice 2019 50% 100% -
Haverfordwest
Vets4Pets Veterinary 29 April
Limited practice 2019 50% 100% -
Linlithgow
Vets4Pets Veterinary
Limited practice 28 May 2019 50% 100% -
East Kilbride
(South) Veterinary
Vets4Pets Limited practice 24 June 2019 50% 100% -
Clitheroe
Vets4Pets Veterinary
Limited practice 11 July 2019 50% 100% -
Carmarthen
Vets4Pets Veterinary
Limited practice 15 July 2019 50% 100% -
Inverurie
Vets4Pets Veterinary
Limited practice 24 July 2019 50% 100% -
Uttoxeter
Vets4Pets Veterinary 19 August
Limited practice 2019 50% 100% -
------------------ ------------------- ------------------ ----------------- ------------------ ------------------
Notes (forming part of the financial statements) continued
10 Business combinations (continued)
Assets acquired and liabilities recognised at the date of
acquisition
The amounts recognised in respect of identifiable assets and
liabilities relating to the acquisition are as follows. The
acquisition disclosures have been combined as each acquisition is
considered to be individually immaterial to the Group.
Adjustments Fair value
Book value of assets on acquisition of assets and
and GBPm liabilities
liabilities acquired acquired
GBPm GBPm
---------------------------- ------------------------ --------------- --------------
Current assets
Cash and cash equivalents 0.0 - 0.0
Trade and other receivables 0.4 - 0.4
Inventories 0.2 - 0.2
Non-current assets
Tangible fixed assets 2.6 (2.6) -
Right -of-use assets 2.2 - 2.2
Non-current liabilities
Lease liabilities (2.2) - (2.2)
Current liabilities
Bank loans and overdrafts (0.3) - (0.3)
Trade and other payables (0.7) - (0.7)
Net assets/(liabilities) 2.2 (2.6) (0.4)
------------------------------- --------------------- --------------- --------------
Goodwill arising on acquisition
GBPm
--------------------------------- ------
Consideration 0.4
Less: Fair value of liabilities
acquired 0.4
--------------------------------- ------
Goodwill arising on acquisition 0.8
--------------------------------- ------
Impairment of goodwill (0.8)
--------------------------------- ------
Carrying value of goodwill -
--------------------------------- ------
The tangible assets have been written down to their expected
recoverable amount.
The consideration shown within the table above relates to the
cash settlement of 'A' shareholder Joint Venture Partner loans,
which were repaid to the 'A' shareholder at the point of
acquisition.
In line with IFRS 3, the right-of-use asset has been brought on
at value equal to the lease liability, adjusted for any
unfavourable market conditions. These leases relate to standalone
veterinary practices. Subsequent to the acquisition, the
right-of-use assets have been fully impaired as the Group does not
expect to receive any benefit for these assets. This is disclosed
in note 12.
Other acquisitions
On 26 July 2019, the Group acquired the 25% minority interest in
Anderson Moores Veterinary Specialists Limited for a consideration
of GBP4.0m, leading to 100% of the share capital being owned.
On 10 September 2019, the Group also acquired a further 15%
minority interest in Dick White Referrals Limited for a
consideration of GBP2.4m, leading to 91% of the share capital now
being owned.
These acquisitions have had no impact on goodwill.
Other investments
On 26 June 2019, the Group acquired a 12% minority interest in
Tailster.com (Dog Stay Limited) for a consideration of GBP1.0m.
This has been accounted for as an investment, measured at fair
value through other comprehensive income.
Notes (forming part of the financial statements) continued
11 Property, plant and equipment
Fixtures,
fittings,
Freehold Short leasehold tools and
property property equipment Total
GBPm GBPm GBPm GBPm
-------------------------------------- --------- --------------- ---------- -----
Cost
Balance at 28 March 2019 2.5 59.4 222.9 284.8
Additions - 5.4 17.6 23.0
On acquisition (note 10) - 0.5 0.3 0.8
Disposals (0.1) (1.4) (0.9) (2.4)
-------------------------------------- --------- --------------- ---------- -----
Balance at 26 March 2020 2.4 63.9 239.9 306.2
-------------------------------------- --------- --------------- ---------- -----
Depreciation
Balance at 28 March 2019 0.3 22.5 138.3 161.1
Depreciation charge for the period 0.0 4.3 24.0 28.3
Impairment of assets (non-underlying) - 1.3 0.4 1.7
Disposals (0.0) (1.3) (0.7) (2.0)
-------------------------------------- --------- --------------- ---------- -----
Balance at 26 March 2020 0.3 26.8 162.0 189.1
-------------------------------------- --------- --------------- ---------- -----
Net book value
At 28 March 2019 2.2 36.9 84.6 123.7
-------------------------------------- --------- --------------- ---------- -----
At 26 March 2020 2.1 37.1 77.9 117.1
-------------------------------------- --------- --------------- ---------- -----
Fixtures,
fittings,
Freehold Short leasehold tools and
property property equipment Total
GBPm GBPm GBPm GBPm
----------------------------------- --------- --------------- ---------- -----
Cost
Balance at 29 March 2018 2.5 53.7 206.9 263.1
Additions - 4.7 16.0 20.7
On acquisition (note 10) - 1.6 0.6 2.2
Disposals - (0.6) (0.6) (1.2)
----------------------------------- --------- --------------- ---------- -----
Balance at 28 March 2019 2.5 59.4 222.9 284.8
----------------------------------- --------- --------------- ---------- -----
Depreciation
Balance at 29 March 2018 0.3 18.7 114.2 133.2
Depreciation charge for the period 0.0 4.0 24.5 28.5
Disposals - (0.2) (0.4) (0.6)
----------------------------------- --------- --------------- ---------- -----
Balance at 28 March 2019 0.3 22.5 138.3 161.1
----------------------------------- --------- --------------- ---------- -----
Net book value
At 29 March 2018 2.2 35.0 92.7 129.9
----------------------------------- --------- --------------- ---------- -----
At 28 March 2019 2.2 36.9 84.6 123.7
----------------------------------- --------- --------------- ---------- -----
Notes (forming part of the financial statements) continued
12 Leases
As Lessee
Property, plant and equipment comprise owned and leased assets
that do not meet the definition of investment property.
The majority of the Group's trading stores, standalone
veterinary practices, specialist referral centres, distribution
centres and support offices are leased under operating leases, with
remaining lease terms of between 1 and 27 years. The Group also has
a number of non-property operating leases relating to vehicle,
equipment and material handling equipment, with remaining lease
terms of between 1 and 6 years.
Information about leases for which the Group is a lessee is
presented below.
Right-of-use assets
Property Equipment Total
GBPm GBPm GBPm
----------------------------------- -------- --------- -----
Cost
Balance at 29 March 2019 463.0 10.1 473.1
Additions 20.6 1.5 22.1
On acquisition (note 10) 2.7 - 2.7
Balance at 26 March 2020 486.3 11.6 497.9
----------------------------------- -------- --------- -----
Depreciation
Balance at 29 March 2019 - - -
Depreciation charge for the period 67.5 3.6 71.1
Impairment (non-underlying) 1.6 - 1.6
Balance at 26 March 2020 69.1 3.6 72.7
----------------------------------- -------- --------- -----
Net book value
At 29 March 2019 463.0 10.1 473.1
----------------------------------- -------- --------- -----
At 26 March 2020 417.2 8.0 425.2
----------------------------------- -------- --------- -----
The costs relating to leases for which the Group applied the
practical expedient described in paragraph 5a of IFRS 16 (leases
with a contract term of less than 12 months) amounted to GBP0.1m in
the 52 week period ended 26 March 2020.
The following table sets out the maturity analysis of lease
payments, showing the undiscounted lease payments to be received
after the reporting date:
Maturity analysis - contractual undiscounted cash flows
At 29 March
At 26 March 2020 2019
GBPm GBPm
--------------------------------------------- ---------------- ------------
Less than one year 82.2 82.6
Between one and five years 258.0 282.6
More than 5 years 182.6 208.3
Total undiscounted lease liabilities 522.8 573.5
--------------------------------------------- ---------------- ------------
Carrying value of lease liabilities included
in the statement of financial position 463.9 506.2
Current 83.7 82.7
Non-current 380.2 423.5
--------------------------------------------- ---------------- ------------
For the lease liabilities at 26 March 2020 a 0.1% change in the
discount rate used would have increased the carrying value of lease
liabilities by GBP2.2m.
Surplus leases
The Group has a small number of leases on properties from which
it no longer trades. A small number of these properties are
currently vacant or the sublet is not for the full term of the
lease and there is deemed to be a risk on the sublet.
On transition to IFRS 16, the Group has elected to apply the
relief option which allows it to adjust the right-of-use asset by
the amount of any provision for an onerous lease. GBP2.7m of the
onerous lease provision has been offset against the opening
right-of-use asset as at 29 March 2019. The remaining onerous lease
provision relates to rates, service charge and other costs and will
remain classified within provisions. In the 52 week period ended 26
March 2020, the Group has charged a further GBP1.6m within
non-underlying costs in relation to expected lease obligations
(under IFRS 16). This provision has been offset against the
right-of-use assets.
The non-underlying impairment loss recognised in the period
relates to the veterinary practices acquired in the period with the
intention of being closed. In line with IAS 36, the carrying value
of these right-of-use assets was assessed for indicators of
impairment and the planned closure was considered to be an
indicator of impairment. The right-of-use asset has been written
down to its expected recoverable value and costs of GBP1.6m have
been charged in the year within non-underlying costs.
Notes (forming part of the financial statements) continued
12 Leases (continued)
Operating leases
The Group has a small number of leases on properties from which
it no longer trades, or a subsection of a trading retail store.
These properties are sublet to third parties at contracted rates.
The Group has classified these leases as operating leases, because
they do not transfer substantially all the risks and rewards
incidental to ownership of the right-of-use asset.
In line with IAS 36, the carrying value of the right-of-use
asset will be assessed for indicators of impairment and an
impairment charge will be recognised if necessary. Under IAS 17, an
onerous lease provision was recognised where management believed
there was a risk of default or where the property remained vacant
for a period of time. As part of this review the Group has assessed
the ability to sub-lease the property and the right-of-use asset
has been written down to GBPnil where the Group does not consider a
sublease likely.
13 Intangible assets
Customer
Goodwill list Software Total
GBPm GBPm GBPm GBPm
-------------------------------------- -------- -------- -------- -------
Cost
Balance at 28 March 2019 981.3 1.7 47.5 1,030.5
Additions - 0.2 15.6 15.8
Balance at 26 March 2020 981.3 1.9 63.1 1,046.3
-------------------------------------- -------- -------- -------- -------
Amortisation
Balance at 28 March 2019 - 0.3 29.5 29.8
Amortisation charge for the period - 0.1 9.8 9.9
Impairment of assets (non-underlying) 0.0 0.1 - 0.1
Impairment of goodwill (underlying) 0.1 - - 0.1
Balance at 26 March 2020 0.1 0.5 39.3 39.9
-------------------------------------- -------- -------- -------- -------
Net book value
At 28 March 2019 981.3 1.4 18.0 1,000.7
-------------------------------------- -------- -------- -------- -------
At 26 March 2020 981.2 1.4 23.8 1,006.4
Customer
Goodwill list Software Total
GBPm GBPm GBPm GBPm
-------------------------------------- -------- -------- -------- -------
Cost
Balance at 29 March 2018 979.8 0.8 33.8 1,014.4
Additions 1.5 0.9 13.7 16.1
Disposals - - - -
-------------------------------------- -------- -------- -------- -------
Balance at 28 March 2019 981.3 1.7 47.5 1,030.5
-------------------------------------- -------- -------- -------- -------
Amortisation
Balance at 29 March 2018 - 0.2 21.3 21.5
Amortisation charge for the period - 0.1 8.2 8.3
Disposals - - - -
-------------------------------------- -------- -------- -------- -------
Balance at 28 March 2019 - 0.3 29.5 29.8
-------------------------------------- -------- -------- -------- -------
Net book value
At 29 March 2018 979.8 0.6 12.5 992.9
-------------------------------------- -------- -------- -------- -------
At 28 March 2019 981.3 1.4 18.0 1,000.7
-------------------------------------- -------- -------- -------- -------
The goodwill impairment in the 52 week period ended 26 March
2020 relates to goodwill acquired as part of the buyout of Bicester
Vets4Pets Limited in the 52 week period ended 28 March 2019.
Impairment testing
Cash generating units ('CGUs') within the Group are considered
to be aligned to the two operating segments as disclosed in note 2.
Within the Retail operating segment, the CGU comprises the body of
stores, online operations, grooming operations and insurance
operations. Within the Vet Group operating segment, the CGU
comprises the First Opinion veterinary practices and specialist
referral centres.
Notes (forming part of the financial statements) continued
13 Intangible assets (continued)
As at 26 March 2020 and 28 March 2019, the Group is deemed to
have CGUs as follows:
Goodwill
---------- -----------------------------
At 28 March
At 26 March 2020 2019
GBPm GBPm
---------- ---------------- -----------
Retail 586.1 586.1
Vet Group 395.1 395.2
---------- ---------------- -----------
Total 981.2 981.3
---------- ---------------- -----------
The recoverable amount of the CGU group has been calculated with
reference to its value in use. The key assumptions of this
calculation are shown below:
52 week
52 week period period
ended ended
26 March 28 March
2020 2019
---------------------------------------------- ----------------- ------ ---------
Retail Vet Group Retail Vet Group
---------------------------------------------- ------ --------- ------ ---------
Period on which management approved forecasts
are based (years) 5 5 5 5
Growth rate applied beyond approved forecast
period 2.0% 3.5% 2.0% 3.5%
Discount rate (pre-tax) 10% 11% 12% 11%
Like-for-like sales growth 4% 11% 4% 9%
Gross profit margin 48% 49% 49% 51%
---------------------------------------------- ------ --------- ------ ---------
The goodwill is considered to have an indefinite useful economic
life and the recoverable amount is determined based on
'value-in-use' calculations. These calculations use a post-tax cash
flow projection based on a five-year plan approved by the Board.
For the purposes of intangible asset impairment testing, the model
removes all cash flows associated with business units (for example
stores or practices yet to open, but within the planning horizon)
which the Group has a strategic intention to invest capital in, but
has not yet done so, thus ensuring that the future cash flows used
in modelling for impairment exclude any cash flows where the
investment is yet to take place, in accordance with the
requirements of IAS 36 to exclude capital expenditure to improve
asset performance. Contributions from and costs associated with new
stores and veterinary practices which are already operational at
the impairment test date are included in the cash flows. The Group
reviews components within CGUs such as stores and veterinary
practices for indicators of impairment. This approach is consistent
with impairment reviews carried out in the 2019 financial
statements. Following the adoption of IFRS 16, the goodwill
impairment model now includes right-of-use assets in the asset base
and cash flows have been adjusted to reflect this.
The key assumptions in the business plans for both the Retail
and Vet Group CGUs are like-for-like sales growth and gross profit
margin. The Retail forecast assumptions reflect continual
innovation and our deep understanding of our customers,
incorporating assumptions based on past experience of the industry,
products and markets in which the CGU operates, in order to
generate the detailed assumptions used in the annual budget setting
process, and five year strategic planning process. The Vet Group
forecast assumptions are based on a deep understanding of the
maturity profile of the practices and their performance,
incorporating assumptions based on past experience of the industry,
services and markets in which the CGU operates in order to generate
the detailed assumptions used in the annual budget setting process,
and five year strategic planning process. The projections are based
on all available information and growth rates do not exceed growth
rates experienced in prior periods. A different set of assumptions
may be more appropriate in future years depending on changes in the
macro-economic environment and the industry in which each CGU
operates.
The discount rate was estimated based on past experience and a
market participant weighted average cost of capital. A post tax
discount rate was used within the value in use calculation. The
pre-tax discount rate is disclosed above in line with IAS 36
requirements.
The Directors have assumed a growth rate projection beyond the
five-year period based on market growth rates based on past
experience within the Group taking into account the economic growth
forecasts within the relevant industries.
The total recoverable amount in respect of goodwill for the CGU
group as assessed by the Directors using the above assumptions is
greater than the carrying amount and therefore no impairment charge
has been recorded in each period, with the exception of the
goodwill impaired immediately following the acquisition of certain
First Opinion veterinary practices as part of the review and
recalibration exercise (see note 10).
Within the Retail CGU, a number of sensitivities have been
applied to the assumptions in reaching this conclusion
including:
- Reduction in growth rate applied beyond forecast period by 100
bps
- Increasing the discount rate by 100 bps
- Reduction in gross margin percentage of 100 bps
- Reduction in FY21 H1 Retail sales by 30% as a COVID-19
sensitivity
None of the above, considered reasonably possible changes in
assumptions, would result in impairment when applied either
individually or collectively.
Within the Vet Group CGU, a number of sensitivities have been
applied to the assumptions in reaching this conclusion
including:
- Reduction in growth rate applied beyond forecast period by 100
bps
- Increasing the discount rate by 100 bps
- Reduction in gross margin percentage of 100 bps
- Reduction in FY21 H1 Vet Group sales by 50% as a COVID-19
sensitivity
None of the above, considered reasonably possible changes in
assumptions, would result in impairment when applied either
individually or collectively. The Directors consider that it is not
reasonably possible for the assumptions to change so significantly
as to eliminate the excess of the recoverable amount over the
carrying value.
Notes (forming part of the financial statements) continued
14 Inventories
At 28 March
At 26 March 2019
2020 GBPm GBPm
--------------- ----------- -----------
Finished goods 62.8 68.2
--------------- ----------- -----------
The cost of inventories recognised as an expense and included in
'cost of sales' is GBP438.3m (period ended 28 March 2019:
GBP388.1m).
Inventory expensed to cost of sales includes the cost of the
Stock Keeping Units (SKUs) sold, supplier income, stock wastage and
foreign exchange variances.
At 26 March 2020 the inventory provision amounted to GBP3.2m (28
March 2019: GBP2.6m). The inventory provision is calculated by
reference to the age of the SKU and the length of time it is
expected to take to sell. The provision percentages applied in
calculating the provision are as follows:
Discontinued stock greater than 365 days: 100%
Current stock greater than 365 days with a use by date: 50%
Current stock within 180 and 365 days with a use by date:
25%
Greater than 180 days with no use by date: 25%
In addition, a provision is held to account for store stock
losses during the period since which the SKU was last counted.
The value of inventory against which an ageing provision is held
is GBP7.1m (2019: GBP7.1m).
In the 52 week period ended 26 March 2020, the value of
inventory written off to the income statement amounted to GBP8.7m
(52 week period ended 28 March 2019: GBP8.1m).
15 Deferred tax assets and liabilities
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the
following:
At 26 March 2020 At 28 March 2019
-------------------------------------- -------------------------- --------------------------
Assets Liabilities Total Assets Liabilities Total
GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------------------- ------ ----------- ----- ------ ----------- -----
Property, plant and equipment 2.4 - 2.4 0.2 - 0.2
Financial assets 0.9 - 0.9 0.1 - 0.1
Financial liabilities - (0.2) (0.2) - (0.3) (0.3)
Other short term timing
differences 2.2 (5.7) (3.5) 1.5 (5.5) (4.0)
-------------------------------------- ------ ----------- ----- ------ ----------- -----
Net deferred tax assets/(liabilities) 5.5 (5.9) (0.4) 1.8 (5.8) (4.0)
-------------------------------------- ------ ----------- ----- ------ ----------- -----
Movement in deferred tax during the period
28 March Recognised Recognised 26 March
2019 in income in equity 2020
GBPm GBPm GBPm GBPm
------------------------------------ -------- ---------- ---------- --------
Property, plant and equipment 0.2 2.2 - 2.4
Net financial (liabilities)/assets (0.2) - 0.9 0.7
Other short term timing differences (4.0) 0.5 - (3.5)
------------------------------------ -------- ---------- ---------- --------
(4.0) 2.7 0.9 (0.4)
------------------------------------ -------- ---------- ---------- --------
Other short term timing differences primarily relate to share
based payment schemes and inventory provisions.
Movement in deferred tax during the period
29 March Recognised Recognised 28 March
2018 in income in equity 2019
GBPm GBPm GBPm GBPm
------------------------------------ -------- ---------- ---------- --------
Property, plant and equipment (0.8) 1.0 - 0.2
Net financial assets/ (liabilities) 0.2 - (0.4) (0.2)
Other short term timing differences (3.8) (0.2) - (4.0)
------------------------------------ -------- ---------- ---------- --------
(4.4) 0.8 (0.4) (4.0)
------------------------------------ -------- ---------- ---------- --------
Notes (forming part of the financial statements) continued
15 Deferred tax assets and liabilities (continued)
Company
Movement in deferred tax during the period
28 March Recognised Recognised 26 March
2019 in income in equity 2020
GBPm GBPm GBPm GBPm
--------------------- -------- ---------- ---------- --------
Net financial assets 0.0 - 0.4 0.4
--------------------- -------- ---------- ---------- --------
The rate used to calculate deferred tax assets and liabilities
is 19% in line with the corporation tax rate.
16 Other financial assets and liabilities
Group Company
---------------------------------------- ------------------------ ------------------------
At 26 March At 28 March At 26 March At 28 March
2020 GBPm 2019 GBPm 2020 GBPm 2019 GBPm
---------------------------------------- ----------- ----------- ----------- -----------
Non-current assets
Investments in Joint Venture veterinary
practices 0.4 0.4 - -
Loans to Joint Venture veterinary
practices - initial set up loans 13.3 13.3 - -
Loans to Joint Venture veterinary
practices - other loans 4.0 3.9 - -
Other investments 1.1 0.1 - -
Other receivables 1.8 1.0 - -
Interest rate swaps 0.3 - 0.3 -
20.9 18.7 0.3 -
---------------------------------------- ----------- ----------- ----------- -----------
Investments in Joint Venture veterinary practices
Investments represent GBP0.4m (2019: GBP0.4m) of the 'B' share
capital in Joint Venture veterinary practice companies. These
investments are held at cost less impairment. The fair values of
investments in unlisted equity securities are considered to be
their carrying value as the impact of discounting future cash flows
has been assessed as not material and the investment is
non-participatory. The share capital of the veterinary practice
companies is split equally into 'A' ordinary shares (held by Joint
Venture Partners) and 'B' ordinary shares (held by the Group). Any
operational decisions require the agreement of the Joint Venture
Partner.
Under the terms of the agreements, the Group ('B' shareholder)
is not entitled to any profits, losses or dividends, or any surplus
on winding up or disposal, although they are entitled to appoint
Directors to the Board and carry the same shareholder voting rights
as 'A' ordinary shareholders.
The agreements entitle the Group to receive income in relation
to support services offered in such areas as clinical development,
promotion and methods of operation as well as service activities
including accountancy, legal and property.
Loans to Joint Venture veterinary practices - initial set up
loans
Loans to Joint Venture veterinary practices of GBP13.3m (2019:
GBP13.3m) are provided to Joint Venture veterinary practice
companies trading under the Companion Care and Vets4Pets brands, in
which the Group's share interest is non-participatory. These loans
represent a long term investment in the Joint Venture, supporting
their initial set up and working capital, and are held at amortised
cost under IFRS 9. The carrying value is cost as the impact of
discounting future cash flows at a market rate of interest has been
assessed as not material. Under the terms of the loans provided to
veterinary companies trading under the Companion Care and Vets4Pets
brands the loans attract varying interest rates between 2% and 3%.
There is no set date for repayment of the loans due to the
Group.
The balances above are shown net of provisions of GBPnil (2019:
GBP1.1m). The provision was in relation to loans with Joint Venture
veterinary practices which the Group was in the process of offering
to buy out and had therefore provided in full for the remaining
loans on these practices, which were considered to be in default
and credit impaired. These costs were charged to non-underlying
operating cost of sales. The movement on the loans is detailed
below.
Gross Carrying
loan value of
value Provision loan
GBPm GBPm GBPm
-------------------------------------------------------- ------ --------- ---------
As at 28 March 2019 14.4 (1.1) 13.3
Net repayment and further advances 0.0 - 0.0
Provisions utilised during the period (non- underlying) (1.1) 1.1 -
-------------------------------------------------------- ------ --------- ---------
As at 26 March 2020 13.3 - 13.3
Closing position (underlying) 13.3 - 13.3
Closing position (non-underlying) - - -
-------------------------------------------------------- ------ --------- ---------
GBP1.1m of loans (2019: GBP1.5m) have been written off in the
year in advance of the acquisition of 28 Joint Venture veterinary
practices in the period. Further details of these acquisitions are
provided in note 10.
Notes (forming part of the financial statements) continued
16 Other financial assets and liabilities (continued)
Loans to Joint Venture veterinary practices - other loans
Loans to Joint Venture veterinary practices - other loans of
GBP4.0m (2019: GBP3.9m) represent loan balances to Joint Venture
veterinary practices and Shared Venture Partners. These loans are
unsecured, typically for five to seven years and attract an
interest rate of LIBOR plus 2.8%. The loans are accounted for at
amortised cost under IFRS 9. The carrying value is considered to be
cost as the impact of discounting future cash flows at a market
rate of interest has been assessed as not material. The loans are
typically to support capacity expansion. The balances above are
shown net of provisions held of GBPnil (2019: GBP1.1m). The
movement on the loans is detailed below.
GBP0.7m (2019: GBP0.4m) of these loans have been written off in
the year in advance of the acquisition of 28 Joint Venture
veterinary practices in the period, with the remaining provision
released through non-underlying costs in the income statement.
Further details of this are provided in note 3.
Carrying
value of
Gross loan Provision loan
value GBPm GBPm GBPm
------------------------------------------------------- ----------- --------- ---------
As at 28 March 2019 5.0 (1.1) 3.9
Net repayment and further advances (0.3) - (0.3)
Provisions utilised during the period (non-underlying) (0.7) 0.7 -
Provisions released during the period (non-
underlying) - 0.4 0.4
----------- --------- ---------
As at 26 March 2020 4.0 - 4.0
Closing position (underlying) 4.0 - 4.0
Closing position (non-underlying) - - -
----------- ---------
Other investments
Other investments are held at fair value through other
comprehensive income ('FVOCI'). The fair values of investments in
unlisted equity securities are considered to be their carrying
value as the impact of discounting future cash flows has been
assessed as not material and the investment is
non-participatory.
Group Company
At 26 March At 28 March At 26 March At 28 March
Other financial assets 2020 GBPm 2019 GBPm 2020 GBPm 2019 GBPm
----------- -----------
Current assets
Fuel forward contracts - 0.0 - -
Forward exchange contracts 0.8 1.6 - -
Other receivables 0.7 - - -
----------- -----------
1.5 1.6 - -
Group Company
At 26 March At 28 March At 26 March At 28 March
Other financial liabilities 2020 GBPm 2019 GBPm 2020 GBPm 2019 GBPm
----------- -----------
Current liabilities
Fuel forward contracts (0.4) - -
Forward exchange contracts (1.7) (0.5) - -
Interest rate swaps (0.0) (0.1) (0.0) (0.1)
Put and call liability - (6.6) - -
Finance lease liabilities (0.1) (0.1) - -
----------- -----------
(2.2) (7.3) (0.0) (0.1)
Group Company
At 26 March At 28 March At 26 March At 28 March
2020 GBPm 2019 GBPm 2020 GBPm 2019 GBPm
----------- -----------
Non-current liabilities
Interest rate swaps (2.3) - (2.3) -
Put and call liability (3.4) (2.3) - -
Finance lease liabilities (0.1) (0.2) - -
(5.8) (2.5) (2.3) -
Notes (forming part of the financial statements) continued
17 Trade and other receivables
Group Company
----------------------------------------- ------------------------
At 26 March At 28 March At 26 March At 28 March
2020 GBPm 2019 GBPm 2020 GBPm 2019 GBPm
----------------------------------------- ----------- ----------- ----------- -----------
Trade receivables 17.4 15.8 - -
Amounts owed by Joint Venture veterinary
practices - funding for new practices 1.6 0.3 - -
Amounts owed by Joint Venture veterinary
practices - operating loans 29.5 27.9 - -
Other receivables 2.2 7.1 - -
Amounts owed by Group undertakings - - 579.2 578.3
Prepayments 1.5 12.4 - -
Accrued income 3.7 5.4 - -
55.9 68.9 579.2 578.3
----------- ----------- -----------
Trade and other receivables
The impairment of trade and other receivables is assessed in
line with IFRS 9. As at 26 March 2020 and 28 March 2019 the impact
of expected credit loss on these balances was deemed to be
immaterial and as such no provision has been made.
Amounts owed by Joint Venture veterinary practices
Amounts owed by Joint Venture veterinary practices represent
funding for new practices, trading balances and operating loans
owed by J oint Venture veterinary practices to the Group. Operating
loans are provided on a short term monthly cycle to the extent that
a practice needs additional funding above their external bank loan.
Practices generate cash on a monthly basis which is applied to the
repayment of brought forward operating loans. For immature
practices, loan balances may increase due to operating
requirements. Based on a projected cash flow forecast on a practice
by practice basis, the funding is expected to be required for a
number of years, however as cash is applied against opening loan
balances, the Group's expectation is that the brought forward
balance will be repaid in cash within 12 months. The loans have
been classified as current on this basis and the Group has chosen
not to charge interest on these balances, which are repayable on
demand, and they are initially recognised under IFRS 9 at their
nominal value as the effect of discounting the expected cash flows
based on the effective interest rate at the market rate of interest
is not material. The loans advanced to the practices are interest
free and either repayable on demand or repayable within 90 days of
demand. No facility exists and the levels of loans are monitored in
relation to review of the practices performance against business
plan and a number of financial and non-financial KPIs.
For those practices in default, a credit impairment charge is
recognised under IFRS 9, taking into the expected cash shortfall
over the workout period. For other practices, a credit impairment
charge is recognised under IFRS 9, taking into account both the
probability of loss and the loss proportion given default.
The balances above are shown net of allowances for expected
credit losses held for operating loans of GBP8.0m (2019: GBP14.3m).
The basis for this allowance and the movement in the period is set
out below and further detail is provided in note 1.22.
Group
Underlying Non-underlying Total
GBPm GBPm GBPm
Gross value of operating loans
As at 28 March 2019 35.0 7.2 42.2
Loans written off - (7.2) (7.2)
Net repayment and further advances 2.5 - 2.5
Gross value of operating loans as at
26 March 2020 37.5 - 37.5
Provision against operating loans
As at 28 March 2019 7.1 7.2 14.3
Utilisation of provision against loans
written off - (7.2) (7.2)
Provisions made during the period -0.9 - 0.9
Provision against operating loans as
at 26 March 2020 8.0 - 8.0
Carrying value of loan at 28 March 2019 27.9 - 27.9
% provision as at 28 March 2019 20.3% 100% 33.9%
Carrying value of loan at 26 March 2020 29.5 - 29.5
% provision as at 26 March 2020 21.3% - 21.3%
During the period ended 26 March 2020, GBP7.2m of operating
loans, which were deemed to be in default due to the significant
underperformance of the practices, were written off as part of the
review and recalibration exercise on Joint Venture veterinary
practices. This balance had been provided for in full at 28 March
2019.
Notes (forming part of the financial statements) continued
17 Trade and other receivables (continued)
The Group holds an underlying provision of GBP8.0m against the
remaining operating loans of GBP37.5m. The underlying provision has
increased by GBP0.9m in the year (GBP2.9m as at 28 March 2019) as
management have updated their expectation of the credit risk
associated with the practices to reflect their latest view of
performance and the level of risk in the market. The Group is
working with a number of Joint Venture Partners, where the Partners
choose to follow Pets at Home's recommendations, on remediation
plans aimed at improving practice performance. Further details
regarding credit risk are provided in note 1.16.
The following table presents an analysis of the credit risk of
debt securities, held at amortised cost, and indicates whether they
were credit impaired.
Based on their score card performance, loans are categorised as
high, medium or low credit risk. The loss allowance is calculated
in accordance with the policy set out in note 1.16, depending on
the credit risk of each loan.
Not credit
Not credit impaired Credit impaired impaired Credit impaired
Credit risk At 26 March At 28 March At 28 March
At 26 March 2020 2020 2019 2019
GBPm GBPm GBPm GBPm
Low 26.6 - 4.5 -
Medium 6.7 - 30.5 -
High 4.2 - - 7.2
Gross carrying amount 37.5 - 35.0 7.2
Loss allowance (8.0) - (7.1) (7.2)
Net carrying amount 29.5 - 27.9 -
Practices categorised as high risk, and credit impaired, in the
prior year related to those practices the Group had identified to
buy out as part of the review and recalibration exercise of the
First Opinion veterinary practices.
Should each operating loan risk, as defined by the risk criteria
in note 1.16, increase by 10%, this would lead to an increase in
the required provision for operating loans of GBP1.9m (28 March
2019: GBP3.5m). This sensitivity is considered by management to
represent a reasonably possible range of estimation uncertainty,
based on the variance in current trading performance within these
Joint Venture veterinary practices. The factors which give rise to
the estimation uncertainty include macro-economic and industry
specific factors, including the level of industry growth, as well
as gross margin percentages achieved within the industry, which
contain a number of factors including the availability of suitably
qualified veterinary personnel. Further details are provided in
note 27.
Accrued income
Accrued income relates to income in relation to fees to Joint
Venture veterinary practices, revenues generated through specialist
referral centres, and overrider and promotional income from
suppliers which have not yet been invoiced . Accrued income is
classified as current as it is expected to be invoiced and received
within 12 months of the period end date. Supplier income is
recognised on an accruals basis, based on the expected entitlement
that has been earned up to the balance sheet date for each relevant
supplier contract. As detailed in note 1.19, supplier income is
recognised as a credit within gross margin to cost of sales and is
outside of the scope of IFRS 15 and therefore a contract asset has
not been separately recognised. Further detail of the Group's
revenue recognition policy is provided in note 1.19.
Company
Amounts owed by Group undertakings
Amounts owed by Group undertakings have been assessed in line
with IFRS 9 and an assessment is made of the expected credit loss.
As at 26 March 2020 and 28 March 2019 the impact of expected credit
loss on these balances was deemed to be immaterial and as such no
provision has been made.
18 Cash and cash equivalents
Group Company
At 26 March At 28 March At 26 March At 28 March
2020 GBPm 2019 GBPm 2020 GBPm 2019 GBPm
----------- -----------
Cash and cash equivalents 79.1 60.5 - -
----------- ----------- ----------- -----------
Notes (forming part of the financial statements) continued
19 Other interest-bearing loans and borrowings
Group Company
------------------------
At 26 March At 28 March At 26 March At 28 March
2020 GBPm 2019 GBPm 2020 GBPm 2019 GBPm
------------------------ ----------- ----------- -----------
Non-current liabilities
Unsecured bank loans 163.3 178.8 163.3 178.8
------------------------ ----------- ----------- ----------- -----------
Terms and debt repayment schedule
Face value Carrying Face value Carrying
at 26 amount at 28 amount
Nominal March at 26 March March at 28 March
interest 2020 2020 2019 2019
Currency rate Year of maturity GBPm GBPm GBPm GBPm
--------- ------------ ------------
Revolving credit
facility GBP LIBOR +1.15% 2023 165.0 163.3 181.0 178.8
--------- ---------- ------------ ------------
The Group has a revolving facility of GBP248.0m which expires in
2023.
The drawn amount was GBP165.0m at 26 March 2020 and this amount
is reviewed each month. Interest is charged at LIBOR plus a margin
based on leverage on a pre-IFRS 16 basis (net debt: EBITDA). Face
value represents the principal value of the revolving credit
facility. The facility is unsecured.
Interest-bearing borrowings are recognised initially at fair
value, being the principal value of the loan net of attributable
transaction costs. Subsequent to initial recognition,
interest-bearing borrowings are stated at a carrying value, which
represents the amortised cost of the loans using the effective
interest method.
The analysis of repayments on the loans is as follows:
At 28 March
At 26 March 2019
2020 GBPm GBPm
--------------------------------------- -----------
Within one year or repayable on demand - -
Between one and two years - -
Between two and five years 165.0 181.0
-----------
165.0 181.0
-----------
The loans at 26 March 2020 and 28 March 2019 are held by the
Company.
The Group's policy with regard to interest rate risk is to hedge
the appropriate level of borrowings by entering into fixed rate
agreements. The Group has entered into one fixed rate interest rate
swap agreement over a total of GBP162.4m of the senior facility
borrowings at the balance sheet date at a fixed rate of 0.814%,
which expires on 30 March 2020. The Group has a further fixed
interest rate swap agreement over a total of GBP137.6m of the
senior facility borrowings at the balance sheet date at a fixed
rate of 0.918% which commences on 31 March 2020 and expires on 31
March 2021. The Group has further fixed interest rate swap
agreements over a total of GBP100.0m of the senior facility
borrowings at the balance sheet date at a blended fixed rate of
0.811% which commences on 31 March 2021 and expires on 25 September
2023.
The hedges are structured to hedge at least 70% of the forecast
outstanding debt for the next 12 months.
Analysis of changes in net debt
At Non-cash At
28 March Cash flow movement 26 March
2019 GBPm GBPm GBPm 2020 GBPm
--------------------------------------- ---------- --------- --------- ----------
Cash and cash equivalents 60.5 18.6 - 79.1
Debt due within one year at face value - - - -
Debt due after one year at face value (181.0) 16.0 - (165.0)
--------------------------------------- ---------- --------- --------- ----------
Net debt (120.5) 34.6 - (85.9)
--------------------------------------- ---------- --------- --------- ----------
Notes (forming part of the financial statements) continued
20 Trade and other payables
Group Company
----------------------------------------- ------------------------
At 26 March At 28 March At 26 March At 28 March
2020 GBPm 2019 GBPm 2020 GBPm 2019 GBPm
----------------------------------------- ----------- ----------- ----------- -----------
Current
Trade payables 110.8 108.8 - -
Accruals 45.1 43.5 0.1 0.6
Amounts owed to Joint Venture veterinary
practices 6.7 4.0 - -
Deferred income in relation to lease
incentives - 5.1 - -
Other payables including tax and social
security 34.0 24.4 - -
Amounts owed to Group undertakings - - 387.7 329.5
----------------------------------------- ----------- ----------- ----------- -----------
196.6 185.8 387.8 330.1
----------------------------------------- ----------- ----------- ----------- -----------
Non-current
----------------------------------------- ----------- ----------- ----------- -----------
Deferred income in relation to lease
incentives - 33.6 - -
----------------------------------------- ----------- ----------- ----------- -----------
The current and non-current deferred income in the period ended
28 March 2019 represents deferred income in respect of store leases
where incentives are spread over the life of the lease. This has
been adjusted against the right-of-use assets as part of the
transition to IFRS 16 in the 52 week period ended 26 March
2020.
Amounts owed to Joint Venture veterinary practices that relate
to trading balances are interest free and repayable on demand.
Within accruals above, contract liabilities under IFRS 15 of
GBP0.7m (2019: GBP0.7m) relate to advanced consideration received
from customers in relation to gift vouchers, cards and points
redeemable by charities. This revenue will be recognised as the
vouchers, cards and points are redeemed, which is expected to be
over the next two years.
Within accruals above, contract liabilities under IFRS 15 of
GBP3.2m (2019: GBP0.2m) relate to advanced consideration received
from customers in relation to online orders which have not yet been
delivered. This revenue will be recognised as the online orders are
delivered to customers, which is expected to be in less than one
week.
21 Provisions
Provisions Provisions
for guarantees for exit and
and lease obligations closure costs
relating to relating to
Closed Joint Venture Joint Venture
Dilapidation stores veterinary veterinary
provision provision practices practices Total
GBPm GBPm GBPm GBPm GBPm
---------- ---------------------- ------
Balance at 28 March 2019 0.7 2.3 5.4 8.6 17.0
Provisions made during
the period 1.3 1.2 0.9 5.2 8.6
Provisions utilised during
the period (0.1) (1.6) (6.3) (9.7) (17.7)
Provisions reclassified
against right-of-use assets -- (0.8) - (1.9) (2.7)
Balance at 26 March 2020 1.9 1.1 - 2.2 5.2
----------
At 26 March At 28 March
2020 GBPm 2019 GBPm
------------ -----------
Current 3.9 15.4
Non-current 1.3 1.7
-----------
5.2 17.1
-----------
The closed stores provision relates to the rates, service charge
and utilities payable on sublet or vacant stores. The timing of the
utilisation of these provisions is variable dependent upon the
lease expiry dates of the properties concerned, which vary between
1 and 5 years. Market conditions have a significant impact and
hence the assumptions on future cash flows are reviewed regularly
and revisions to the provision made where necessary.
The provision is discounted in line with the discount rates used
to calculate the value of a right-of-use asset. A decrease in this
rate of 100 bps would increase the provision by GBP0.0m.
The provisions for guarantees and lease obligations relating to
Joint Venture veterinary practices includes guarantees to third
parties for bank loans, overdrafts and lease obligations payable by
Joint Venture veterinary practices which the Group has bought out
from Joint Venture Partners and therefore which have been provided
for under IFRS 9.
The provisions for exit and closure costs relating to Joint
Venture veterinary practices relate to expenses for any Joint
Venture veterinary practices that the Group has bought out from
Joint Venture Partners, and therefore which have been provided for
under IAS 37. The timing of the utilisation of these provisions is
variable dependent upon the lease expiry dates of the properties
concerned, which vary between 1 and 14 years. Market conditions
have a significant impact and hence the assumptions on future cash
flows are reviewed regularly and revisions to the provision made
where necessary.
Notes (forming part of the financial statements) continued
22 Capital and reserves
Share capital
Group
Share capital Share capital
Number GBPm
----------------- ------------- -------------
At 29 March 2018 500,000,000 5.0
At 28 March 2019 500,000,000 5.0
At 26 March 2020 500,000,000 5.0
------------- -------------
Company
Share capital
26 March
2020
GBPm
-------------
At beginning of period 5.0
On issue at period end 5.0
-------------
Share capital
28 March
2019
GBPm
-------------
At beginning of period 5.0
On issue at period end 5.0
-------------
The holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to one vote per
share at meetings of the Company.
Translation reserve
The translation reserve comprises all foreign exchange
differences arising since 21 November 2011, the date of
incorporation of Pets at Home Asia Ltd where the functional
currency differs from that of the rest of the Group.
Cash flow hedging reserve
The cash flow hedging reserve comprises the effective portion of
the cumulative net change in the fair value of cash flow hedging
instruments related to hedged transactions that have not yet
occurred.
Retained earnings
Included within the Group is Pets at Home Employee Benefit Trust
(EBT). The EBT purchases shares to fund the share option schemes.
As at 26 March 2020, the EBT held 5,749,377 ordinary shares (28
March 2019: 4,596,471) with a cost of GBP11,805,745 (2019:
GBP7,905,930).The market value of these shares as at 26 March 2020
was 268.80 pence per share (26 March 2019: 160.50).
Other comprehensive income
26 March 2020
Cash flow Total other
Translation hedging comprehensive
reserve reserve income
GBPm GBPm GBPm
---------------------------------------------- ----------- --------- --------------
Other comprehensive income (0.1) - (0.1)
Effective portion of changes in fair value of
cash flow hedges - (5.5) (5.5)
Deferred tax on changes in fair value of cash
flow hedges - 0.9 0.9
---------------------------------------------- ----------- --------- --------------
Total other comprehensive income (0.1) (4.6) (4.7)
---------------------------------------------- ----------- --------- --------------
28 March 2019
Cash flow Total other
Translation hedging comprehensive
reserve reserve income
GBPm GBPm GBPm
---------------------------------------------- ----------- --------- --------------
Other comprehensive income (0.1) - (0.1)
Effective portion of changes in fair value of
cash flow hedges - 1.0 1.0
Deferred tax on changes in fair value of cash
flow hedges - (0.4) (0.4)
---------------------------------------------- ----------- --------- --------------
Total other comprehensive income (0.1) 0.6 0.5
---------------------------------------------- ----------- --------- --------------
Notes (forming part of the financial statements) continued
23 Financial instruments
Financial risk management
The Group's activities expose it to a variety of financial
risks: market risk (including currency risk, fair value interest
rate risk and cash flow interest rate risk), credit risk and
liquidity risk.
Risk management framework
Risk management in respect of financial risk is carried out by
the Group Treasury function under policies approved by the Board of
Directors. The Board of Directors has overall responsibility for
the establishment and oversight of the Group's risk management
framework. The Board provides written principles through its Group
Treasury Policy for overall risk management, as well as written
policies covering specific areas, such as foreign exchange risk,
interest rate risk, credit risk, use of derivative financial
instruments and non-derivative financial instruments, and
investment of excess liquidity.
The main objectives of the Group Treasury function are:
To ensure shareholder and management expectations are managed on
cash flow and earnings volatility resulting from financial market
movements;
To protect the expected cash flow and earnings from interest
rate and foreign exchange fluctuations to within parameters
acceptable to the Board and shareholders; and
To control banking costs and service levels.
Market risk
Foreign currency risk
The Group sources a significant level of purchases in foreign
currency, in excess of US$70 million each financial year, and
monitors its foreign currency requirements through short, medium
and long term cash flow forecasting. The value of purchases in US
dollars continues to increase each year and the risk management
policy has evolved with this increased risk.
At 26 March 2020, the Group's policy is to hedge up to 95% of
the next 12 months and additionally up to 60% of the following six
months out to 18 months forecast foreign exchange transactions,
using foreign currency bank accounts and forward foreign exchange
contracts. The transactions are deemed to be 'highly probable' and
are based on historical knowledge and forecast purchase and sales
projections.
The Group's exposure to foreign currency risk is as follows.
This is based on the carrying amount for monetary financial
instruments, except for derivatives which are based on notional
amounts:
26 March 2020
Euro US Dollar HKD Total
GBPm GBPm GBPm GBPm
--------------------------- ----- --------- ----- -----
Cash and cash equivalents 0.8 0.4 0.0 1.2
Trade payables (1.1) (6.5) - (7.6)
Forward exchange contracts (0.0) (1.0) - (1.0)
--------------------------- ----- --------- ----- -----
Balance sheet exposure (0.3) (7.1) 0.0 (7.4)
--------------------------- ----- --------- ----- -----
28 March 2019
Euro US Dollar HKD Total
GBPm GBPm GBPm GBPm
--------------------------- ----- --------- ----- -----
Cash and cash equivalents 0.5 - 0.0 0.5
Trade payables - (7.7) - (7.7)
Forward exchange contracts (0.2) 1.4 - 1.2
--------------------------- ----- --------- ----- -----
Balance sheet exposure 0.3 (6.3) 0.0 (6.0)
--------------------------- ----- --------- ----- -----
Sensitivity analysis
A 5% weakening of the following currencies against the pound
sterling at the period end date in both years would have
increased/(decreased) profit or loss or equity by the amounts shown
below. This calculation assumes that the change occurred at the
balance sheet date and had been applied to risk exposures existing
at that date.
This analysis assumes that all other variables, in particular
other exchange rates and interest rates, remain constant.
Equity Profit or loss
----------
26 March 28 March 26 March 28 March
2020 2019 2020 2019
GBPm GBPm GBPm GBPm
---------- -------- -------- -------- --------
US Dollar 0.0 (0.1) 0.3 0.4
Euro - 0.0 0.0 (0.0)
---------- -------- -------- -------- --------
A 5% strengthening of the above currencies against the pound
sterling in any period would have had the equal but opposite effect
on the above currencies to the amounts shown above, on the basis
that all other variables remain constant.
Notes (forming part of the financial statements) continued
23 Financial instruments (continued)
(ii) Interest rate risk
Cash flow and fair value interest rate risk
The Group's interest rate risk arises from long term borrowings.
As at 26 March 2020, the Group had a revolving credit facility with
a face value totalling GBP165.0m. The Group's borrowings as at 26
March 2020 incur interest at a rate of 1.15% plus LIBOR at the
leverage prevalent in the period, which exposes the Group to cash
flow interest rate risk. The analysis of loan repayments is
detailed in note 19.
The Group's policy with regard to interest rate risk is to hedge
the appropriate level of borrowings by entering into fixed rate
agreements. The Group has a fixed rate interest rate swap agreement
over a total of GBP162.4m of the revolving credit facility
borrowings at the balance sheet date at a fixed rate of 0.814%,
which expires on 30 March 2020. The Group has a further fixed
interest rate swap agreement over a total of GBP137.6m of the
senior facility borrowings at the balance sheet date at a fixed
rate of 0.918% which commences on 31 March 2020 and expires on 31
March 2021. The Group has further fixed interest rate swap
agreements over a total of GBP100.0m of the senior facility
borrowings at the balance sheet date at a blended fixed rate of
0.811% which commences on 31 March 2021 and expires on 25 September
2023. The hedge is structured to hedge at least 70% of the forecast
outstanding debt for the next year.
Profile
At the balance sheet date the interest rate profile of the
Group's interest-bearing financial instruments was:
Group Company
Book value Book value Book value Book value
At 26 March At 28 March At 26 March At 28 March
2020 GBPm 2019 GBPm 2020 GBPm 2019 GBPm
------------
Fixed rate instruments
Financial liabilities 162.4 142.1 163.3 142.1
Variable rate instruments
Financial liabilities 0.9 36.7 - 36.7
------------ ------------
Total financial liabilities 163.3 178.8 163.3 178.8
------------ ------------
All borrowings bear a variable rate of interest based on LIBOR.
Group policy is to hedge at least 70% of the loan to ensure a fixed
rate of interest. Therefore, designated above is the portion of the
loan hedged by a fixed rate interest rate swap and the remaining
un-hedged portion is designated as variable rate.
Sensitivity analysis
A change of 50 basis points in interest rates at the period end
date would have increased/ (decreased) equity and profit or loss by
the amounts shown below. This calculation assumes that the change
occurred at the balance sheet date and had been applied to risk
exposures existing at that date.
This analysis assumes that all other variables, in particular
foreign currency rates, remain constant and considers the effect of
financial instruments with variable interest rates, financial
instruments at fair value through profit or loss or available for
sale with fixed interest rates and the fixed rate element of
interest rate swaps. The analysis is performed on the same basis
for the comparative period.
At 26 March At 28 March
2020 GBPm 2019 GBPm
--------------- -----------
Equity
Increase 0.8 0.7
Decrease (0.8) (0.7)
Profit or loss
Increase - 0.2
Decrease - (0.2)
-----------
Credit risk
Financial risk management
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails to meet
its contractual obligations and arises principally from the Group's
receivables from customers, investment securities and operating
loans to Joint Venture veterinary practices.
Credit risk also arises from cash and cash equivalents,
derivative financial instruments and deposits with banks and
financial institutions. The Group ensures that the banks used for
the financing of the revolving credit facilities and interest rate
swap agreements hold an acceptable risk rating by independent
parties.
The Group has in place certain guarantees over the bank loans
taken out by a number of Joint Venture veterinary practice
companies in which it holds an investment. Further details of these
guarantees are disclosed in note 27. The performance of the Joint
Venture veterinary practice companies is reviewed on an on-going
basis.
Exposure to credit risk
The Group's maximum exposure to credit risk, being the carrying
amount of financial assets, is summarised in the table within the
fair values section below.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due.
Management prepares and monitors rolling forecasts of the
Group's cash balances based on expected cash flows to ensure, as
far as possible, that it will have sufficient liquidity to meet its
liabilities when due, under both normal and stressed conditions
without risking damage to the Group's reputation. Covenants are
monitored on a regular basis to ensure there is no risk or breach
which would lead to an 'Event of Default' and compliance
certificates are issued as required to the syndicate agent.
Notes (forming part of the financial statements) continued
23 Financial instruments (continued)
The following are the contractual maturities of financial
liabilities, including estimated interest payments:
Group
26 March 2020
Carrying Contractual 1 year 1 to <2 2 to <5 5 years
amount cash flows or less years years and over
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- ----------- --------- -------
Non-derivative financial
liabilities
Bank loans (note 19) 163.3 165.0 - - 165.0 -
Trade payables (note 20) 110.8 110.8 110.8 - - -
Finance lease liabilities
(note 16) 0.2 0.2 0.1 0.1 - -
Put and call liability
(note 16) 3.4 3.4 - 3.0 0.2 0.2
Derivative financial liabilities
Interest rate swaps used
for hedging:
Outflow (note 16) 2.3 2.3 0.0 1.0 1.3 - -
Forward exchange contracts
used for hedging:
Outflow (note 16) 1.7 1.7 1.7 - - -
Fuel forward contracts
used for hedging:
Outflow (note 16) 0.4 0.4 0.4 0.0 - -
282.1 283.8 113.0 4.1 166.5 0.2
----------- --------- -------
28 March 2019
Carrying Contractual 1 year 1 to <2 2 to <5 5 years
amount cash flows or less years years and over
GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------------- ----------- --------- ------- ------------- ---------
Non-derivative financial
liabilities
Bank loans (note 19) 178.8 181.0 - - 181.0 -
Trade payables (note 20) 108.8 108.8 108.8 - - -
Finance lease liabilities
(note 16) 0.3 0.3 0.1 0.1 0.1 -
Put and call liability
(note 16) 8.9 8.9 6.6 - 2.3 -
Derivative financial liabilities
Interest rate swaps used
for hedging:
Outflow (note 16) 0.1 0.1 0.1 - - -
Forward exchange contracts
used for hedging:
Outflow (note 16) 0.5 0.5 0.5 - - -
297.4 299.6 116.1 0.1 183.4 -
----------- --------- ------- ------------- ---------
Company
26 March 2020
Carrying Contractual 1 year 1 to <2 2 to <5 5 years
amount cash flows or less years years and over
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ----------- --------- ------- ------------- ---------
Non-derivative financial
liabilities
Bank loans (note 19) 163.3 165.0 - - 165.0 -
163.3 165.0 - - 165.0 -
----------- --------- ------- ------------- ---------
28 March 2019
Carrying Contractual 1 year 1 to <2 2 to <5 5 years
amount cash flows or less years years and over
GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- ----------- --------- ------- ------------- ---------
Non-derivative financial
liabilities
Bank loans (note 19) 178.8 181.0 - - 181.0 -
178.8 181.0 - - 181.0 -
----------- --------- ------- ------------- ---------
Liquidity risk and cash flow hedges
Cash flow hedges
The following table indicates the periods in which the cash
flows associated with cash flow hedging instruments are expected to
occur and to affect profit or loss:
Notes (forming part of the financial statements) continued
23 Financial instruments (continued)
Group
26 March 2020
Carrying Expected 1 year 1 to <2 2 to <5 5 years
amount cash flows or less years years and over
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- ----------- -------- ------- ------------- ---------
Interest rate swaps:
Assets (note 16) 0.3 0.3 - - 0.3 -
Liabilities (note 16) (2.3) (2.3) 0.0 (1.0) (1.3) -
Forward exchange contracts:
Assets (note 16) 0.8 0.8 0.8 - - -
Liabilities (note 16) (1.7) (1.7) (1.7) - - -
Fuel forward contracts:
Liabilities (note 16) (0.4) (0.4) (0.4) (0.0) - -
---------------------------- -------- ----------- -------- ------- ------------- ---------
(3.3) (3.3) (1.3) (1.0) (1.0) -
---------------------------- -------- ----------- -------- ------- ------------- ---------
28 March 2019
Carrying Expected 1 year 1 to <2 2 to <5 5 years
amount cash flows or less years years and over
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- ----------- -------- ------- ------------- ---------
Interest rate swaps:
Liabilities (note 16) (0.1) (0.1) (0.1) - - -
Forward exchange contracts:
Assets (note 16) 1.6 1.6 1.6 - - -
Liabilities (note 16) (0.5) (0.5) (0.5) - - -
Fuel forward contracts:
Assets (note 16) 0.0 0.0 0.0 - - -
---------------------------- -------- ----------- -------- ------- ------------- ---------
1.0 1.0 1.0 - - -
---------------------------- -------- ----------- -------- ------- ------------- ---------
Company
26 March 2020
Carrying Expected 1 year 1 to <2 2 to <5 5 years
amount cash flows or less years years and over
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- ----------- -------- ------- ------------- ---------
Interest rate swaps:
Assets (note 16) 0.3 0.3 - - 0.3 -
Liabilities (note 16) (2.3) (2.3) - (1.0) (1.3) -
(2.0) (2.0) - (1.0) (1.0) -
----------- -------- ------- ------------- ---------
28 March 2019
Carrying Expected 1 year 1 to <2 2 to <5 5 years
amount cash flows or less years years and over
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- ----------- -------- ------- ------------- ---------
Interest rate swaps:
Liabilities (note 16) (0.1) (0.1) (0.1) - - -
(0.1) (0.1) (0.1) - - -
----------- -------- ------- ------------- ---------
Fair values of financial instruments
Investments
The fair values of investments are considered to be their
carrying value as the impact of discounting future cash flows has
been assessed as not material and the investment is
non-participatory.
Trade and other payables and receivables
The fair values of these items are considered to be their
carrying value as the impact of discounting future cash flows has
been assessed as not material.
Cash and cash equivalents
The fair value of cash and cash equivalents is estimated as its
carrying amount where the cash is repayable on demand. Where it is
not repayable on demand (such as term deposits), then the fair
value is estimated at the present value of future cash flows,
discounted at the market rate of interest at the balance sheet
date.
Long term and short term borrowings
The fair value of bank loans and other loans approximates its
carrying value as it has an interest rate based on LIBOR.
Notes (forming part of the financial statements) continued
23 Financial instruments (continued)
Fair values of financial instruments
Short term deposits
The fair value of short term deposits is considered to be their
carrying value as the balances are held in floating rate accounts
where the interest rate is reset to market rates.
Derivative financial instruments
The fair values of forward exchange contracts and interest rate
swap contracts are calculated by management based on external
valuations received from the Group's bankers and are based on
forward exchange rates and anticipated future interest yield
respectively.
Contingent consideration
Contingent consideration on acquisition of a subsidiary is
valued at fair value at the time of acquisition. Any subsequent
changes in fair values are recognised in profit or loss.
Put and call options over non-controlling interests
Put and call options over non-controlling interests are
recognised at fair value at the acquisition date and included
within the valuation of goodwill. Subsequent changes to fair value
are recognised in profit or loss
Fair values
The fair values of all financial assets and financial
liabilities by class together with their carrying amounts shown in
the balance sheet are as follows:
Fair value hierarchy
The table below shows the carrying amounts and fair values of
financial assets and financial liabilities, including their levels
in the fair value hierarchy.
Level 1: quoted prices (unadjusted) in active markets for
identical assets or liabilities
Level 2: inputs other than quoted prices included within Level 1
that are observable for the asset or liability, either directly
(i.e. as prices) or indirectly (i.e. derived from prices)
Level 3: inputs for the asset or liability that are not based on
observable market data (unobservable inputs)
Notes (forming part of the financial statements) continued
23 Financial instruments (continued)
26 March 2020
Carrying amount Fair value FVOCI Financial Other Total
- hedging - equity assets financial carrying
instruments instruments at amortised liabilities amount
cost
GBPm GBPm GBPm GBPm GBPm
Financial assets measured at
fair value
Investments in Joint Venture
veterinary practices (note
16) - 0.4 - - 0.4
Other investments (note 16) - 1.1 - - 1.1
Forward exchange contracts
used for hedging (note 16) 0.8 - - - 0.8
Interest rate swaps used for
hedging (note 16) 0.3 - - - 0.3
1.1 1.5 - - 2.6
Financial assets not measured
at fair value
Current trade and other receivables
(note 17) - - 19.6 - 19.6
Amounts owed by Joint Venture
veterinary practices - funding,
trading and operating loans
(note 17) - - 31.1 - 31.1
Cash and cash equivalents (note
18) - - 79.1 - 79.1
Loans to Joint Venture veterinary
practices - initial set up
loans (note 16) - - 13.3 - 13.3
Loans to Joint Venture veterinary
practices - other loans (note
16) - - 4.0 - 4.0
Other receivables (note 16) - - 2.5 - 2.5
- - 149.6 - 149.6
Financial liabilities measured
at fair value
Fuel forward contracts used
for hedging (note 16) (0.4) - - - (0.4)
Forward exchange contracts
used for hedging (note 16) (1.7) - - - (1.7)
Interest rate swaps used for
hedging (note 16) (2.3) - - - (2.3)
(4.4) - - - (4.4)
Financial liabilities not measured
at fair value
Finance lease liabilities (note
16) - - - (0.2) (0.2)
Current lease liabilities (note
12) - - - (83.7) (83.7)
Non-current lease liabilities
(note 12) - - - (380.2) (380.2)
Trade payables (note 20) - - - (110.8) (110.8)
Amounts owed to Joint Venture
veterinary practices (note
20) - - - (6.7) (6.7)
Put & call liability (note
16) - - - (3.4) (3.4)
Other interest-bearing loans
and borrowings (note 19) - - - (163.3) (163.3)
- - - (748.3) (748.3)
Notes (forming part of the financial statements) continued
23 Financial instruments (continued)
26 March 2020
----------------------------------------------------
Fair value Level Level Level Total
1 2 3
GBPm GBPm GBPm GBPm
Financial assets measured at fair value
Investments in Joint Venture veterinary practices
(note 16) - - 0.4 0.4
Other investments (note 16) - - 1.1 1.1
Forward exchange contracts used for hedging
(note 16) - 0.8 - 0.8
Interest rate swaps used for hedging (note
16) - 0.3 - 0.3
Financial assets not measured at fair value
Amounts owed by Joint Venture veterinary practices
- Funding and operating loans (note 17) - - 31.1 31.1
Loans to Joint Venture veterinary practices
- initial set up loans (note 16) - - 13.3 13.3
Loans to Joint
Venture
veterinary
practices - other
loans
(note 16) - - 4.0 4.0
Other receivables
(note
16) - - 2.5 2.5
Financial
liabilities
measured
at fair value
Fuel forward
contracts used
for hedging (note
16) - (0.4) - (0.4)
Forward exchange
contracts
used for hedging
(note 16) - (1.7) - (1.7)
Interest rate
swaps used
for hedging (note
16) - (2.3) - (2.3)
Financial
liabilities not
measured at fair
value
Put & call
liability - - (3.4) (3.4)
Other
interest-bearing
loans
and borrowings
(note 19) - (165.0) - (165.0)
28 March 2019
Carrying amount Fair value FVOCI Financial Other Total
- hedging - equity assets financial carrying
instruments instruments at amortised liabilities amount
cost
GBPm GBPm GBPm GBPm GBPm
Financial assets measured at fair
value
Investments in Joint Venture
veterinary
practices (note 16) - 0.4 - - 0.4
Other investments (note 16) - 0.1 - - 0.1
Fuel forward contracts used for
hedging (note 16) 0.0 - - - 0.0
Forward exchange contracts used
for hedging (note 16) 1.6 - - - 1.6
1.6 0.5 - - 2.1
Financial assets not measured at
fair value
Current trade and other receivables
(note 17) - - 22.9 - 22.9
Amounts owed by Joint Venture
veterinary
practices
- funding and operating loans (note
17) - - 28.2 - 28.2
Cash and cash equivalents (note
18) - - 60.5 - 60.5
Loans to Joint Venture veterinary
practices - initial set up loans
(note 16) - - 13.3 - 13.3
Loans to Joint Venture veterinary
practices - other loans (note 16) - - 3.9 - 3.9
Other receivables (note 16) - - 1.0 - 1.0
- - 129.8 - 129.8
Financial liabilities measured
at fair value
Forward exchange contracts used
for hedging (note 16) (0.5) - - - (0.5)
Interest rate swaps used for hedging
(note 16) (0.1) - - - (0.1)
(0.6) - - - (0.6)
Financial liabilities not measured
at fair value
Put and call liability (note 16) - - - (8.9) (8.9)
Finance lease liabilities (note
16) - - - (0.3) (0.3)
Trade payables (note 20) - - - (108.8) (108.8)
Amounts owed to Joint Venture
veterinary
practices (note 20) - - - (4.0) (4.0)
Other interest-bearing loans and
borrowings (note 19) - - - (178.8) (178.8)
- - - (300.8) (300.8)
Notes (forming part of the financial statements) continued
23 Financial instruments (continued)
28 March 2019
---------------------------------
Fair value Level 1 Level Level Total
2 3
GBPm GBPm GBPm GBPm
Financial assets measured at fair value
Investments in Joint Venture veterinary practices
(note 16) - - 0.4 0.4
Other investments (note 16) - - 0.1 0.1
Fuel forward contract used for hedging (note
16) - 0.0 - 0.0
Forward exchange contracts used for hedging
(note 16) - 1.6 - 1.6
Financial assets not measured at fair value
Amounts owed by Joint Venture veterinary
practices
- funding, trading and operating loans (note
17) - - 28.2 28.2
Loans to Joint Venture veterinary practices
- initial set up loans (note 16) - - 13.3 13.3
Loans to Joint Venture veterinary practices
- other loans (note 16) - - 3.9 3.9
Other receivables (note 16) - - 1.0 1.0
Financial liabilities measured at fair value
Forward exchange contracts used for hedging
(note 16) - (0.5) - (0.5)
Interest rate swaps used for hedging (note
16) - (0.1) - (0.1)
Financial liabilities not measured at fair
value
Put and call liability (note 16) - - (8.9) (8.9)
Other interest-bearing loans and borrowings
(note 19) - (181.0) - (181.0)
Changes in liabilities arising from financing activities
Loans and Lease Total
borrowings liabilities
GBPm GBPm GBPm
Balance at 29 March 2019 178.8 506.2 685.0
Changes from financing cash flows
Proceeds from loans and borrowings 61.0 - 61.0
Repayment of borrowings (77.0) - (77.0)
Payment of lease liabilities - (81.0) (81.0)
Total changes from financing cash flows 162.8 425.2 588.0
Other changes
Interest expense on lease liabilities - 14.0 14.0
Additions to lease liabilities - 24.7 24.7
Amortisation of debt issue costs 0.5 - 0.5
Total other changes 0.5 38.7 39.2
Balance at 26 March 2020 163.3 463.9 627.2
Measurement of fair values
The following table shows the valuation techniques used in
measuring Level 2 and Level 3 fair values at the balance sheet
dates, as well as the significant unobservable inputs used.
Type Valuation technique Significant Inter-relationship between
unobservable significant unobservable
inputs inputs and fair value
measurement
Investment The fair values of investments Not applicable Not applicable
in equity in unlisted equity securities
securities are considered to be
their carrying value
as the impact of discounting
future cash flows has
been assessed as not
material and the investment
is non-participatory.
Forward exchange Market comparison technique Not applicable Not applicable
contracts - the fair values are
and interest based on broker quotes.
rate swaps Similar contracts are
traded in an active market
and the quotes reflect
the actual transactions
on similar instruments.
Other financial Other financial liabilities Future earnings Fair value linked to
liabilities include the fair values performance increase or decrease
of the put and call options in the best estimate
over the non-controlling of the future earnings
interests of subsidiary performance
undertakings. The fair
values represent the
best estimate of amounts
payable based on future
earnings performance
discounted to present
value.
Notes (forming part of the financial statements) continued
23 Financial instruments (continued)
Hedge accounting
Cash flow hedges
At 26 March 2020 and 28 March 2019, the Group held the following
instruments to hedge exposures to changes in foreign currency and
interest rates.
Maturity
1-6 months 6-12 months More than 1 year 1-6 months 6-12 months More than 1 year
2020 2020 2020 2019 2019 2019
Foreign currency risk
Forward exchange contracts
Net exposure (GBPm) 36.6 15.0 - 29.2 28.8 -
Average GBP-USD forward contract
rate 1.27 1.31 - 1.38 1.32 -
Average GBP-EUR forward contract
rate 1.14 1.19 - 1.13 1.11 -
Interest rate risk
Interest rate swaps
Net exposure (GBPm) 162.4 - 237.6 142.1 - 167.5
Average fixed interest rate 0.814% - 0.865% 0.183% - 0.814%
Company
The Company held interest rate swaps as at 26 March 2020 and 28
March 2019 which are valued as above.
Capital management
The Group's objectives when managing capital, which is deemed to
be total equity plus total debt, are to safeguard the Group's
ability to continue as a going concern in order to provide returns
for shareholders and benefits for other stakeholders, through the
optimisation of the debt and equity balance, and to maintain a
strong credit rating and headroom on financial covenants. The Group
manages its capital structure and makes appropriate decisions in
light of the current economic conditions and strategic objectives
of the Group.
The Board's policy is to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain
future development of the Group.
The funding requirements of the Group are met by the utilisation
of external borrowings together with available cash, as detailed in
note 19.
A key objective of the Group's capital management is to maintain
compliance with the covenants set out in the revolving credit
facility and to maintain a comfortable level of headroom over and
above these requirements.
Management have continued to measure and monitor covenant
compliance throughout the period and the Group has complied with
the requirements set.
Notes (forming part of the financial statements) continued
24 Share based payments
At 26 March 2020, the Group has five share award plans, all of
which are equity settled schemes.
1 The Co-Invest Plan (CIP)
On 25 February 2014 the Company adopted the Co-Invest Plan
(CIP). Matching awards under the CIP (as described in section 1(b)
below) were made on 17 March 2014 to Executive Directors and the
Senior Executives by reference to corresponding investment pledges
by those colleagues.
These matching awards vested over a period of three years
subject to the satisfaction of performance conditions and once
vested as to performance became exercisable in equal one-third
tranches in years three, four and five subject to continued
employment with the Group. These awards were granted at nil
cost.
(a) Eligibility
Only the Executive Directors, the Senior Executives and certain
other senior colleagues were selected to participate in the
CIP.
(b) Type of awards
Colleagues were invited to participate in the CIP by making an
'investment' or 'pledge' of their own shares (the 'Co-Invest
Shares'), which could include existing, locked-in shares or new
shares acquired with cash, in return for a nil cost-matching award
over shares (the 'Matching Award').
Matching Awards were granted by reference to a ratio not
exceeding one matched share for every Co-Invest Share 'pledged'.
Matching Awards under the CIP did not form part of a participant's
pensionable earnings and are not transferable other than on
death.
(c) Individual limits
The Executive Directors and the Senior Executives pledged
Co-Invest Shares with a market value equal to 2.5 times their
annual salary. Other senior colleagues who elected to participate
in the CIP pledged Co-Invest Shares with a market value equal to a
limit specified by the Remuneration Committee, but not exceeding 1
times their annual salary.
(d) Performance, vesting and performance adjustment
The Matching Awards granted on 17 March 2014 vested subject to
the satisfaction of the performance conditions outlined below. To
the extent that any future awards are granted, different conditions
may apply (in the absolute discretion of the Remuneration
Committee).
The performance conditions were as follows:
75% of the Matching Award was subject to the CAGR in the
Company's earnings per share ('EPS') over three financial years,
namely FY15, FY16 and FY17 (together the 'Performance Period')
(which, for the avoidance of doubt, ended on 30 March 2017). If the
CAGR in the Company's EPS was 10%, then 10% of the total Matching
Award would vest. If the CAGR in the Company's EPS was 17.5% or
more, then 75% of the total Matching Award would vest. Vesting was
on a straight-line basis between these two points. For the
avoidance of doubt, if the CAGR in the EPS was less than 10% over
the Performance Period then the amount of the Matching Award which
would vest under this EPS performance condition would be nil.
25% of the total Matching Award was subject to the Company's
total shareholder return ('TSR') as compared to a comparator group
made up of a selected group of retail companies over the
Performance Period. Vesting of 6.25% of the total Matching Award
would occur for median performance. Vesting of the maximum 25% of
the total Matching Award would occur for upper quartile performance
or above. Vesting would occur on a straight-line basis between
these two points. If the Company's TSR performance over the
Performance Period was below median, then the amount of the
Matching Award which would vest under this TSR performance
condition would be nil.
To the extent vested as to performance, Matching Awards became
exercisable in three equal amounts on the third, fourth and fifth
anniversary of 17 March 2014, but subject to continued employment
with the Group.
2 CSOP
On 25 February 2014 the Company adopted the CSOP. Part I of the
CSOP is tax approved under Schedule 4 to the Income Tax (Earnings
and Pensions) Act 2003 and provides for the grant of tax approved
options. Part II of the CSOP provides for the grant of unapproved
options.
The tax approved options under Part I of the CSOP will be
exercisable between the third and tenth anniversary of the date of
grant, subject to continued employment with the Group. These awards
will be granted with an exercise price equal to the market value of
the shares at the grant date (as agreed with HMRC).
(a) Eligibility
All colleagues, including the Executive Directors and Senior
Executives, are eligible to participate in the CSOP, at the
discretion of the Remuneration Committee.
(b) Grant of options
No options may be granted more than ten years after the adoption
of the CSOP. Options under the CSOP will not form part of a
colleague's pensionable earnings.
(c) Vesting and performance
Colleagues who receive options under the CSOP and under the PSP
in connection with Admission will be subject to the same
performance conditions described in Section 1 (d) above in respect
of both grants. Colleagues who only receive options under the CSOP
in connection with Admission will not be subject to performance
conditions.
(d) Exercise price
The price at which an option holder may acquire shares on the
exercise of an option shall be determined by the Board but shall
not be less than the greater of market value of a share at the time
of grant and its nominal value. The exercise price is therefore
fixed at grant date.
(e) Individual limits
No option may be granted to an eligible colleague under Part I
of the CSOP which would result in the aggregate exercise prices of
shares comprised in all outstanding options granted to him/her
under Part I, when aggregated with outstanding options held under
any other tax approved executive share option scheme established by
the Company, exceeding the tax approved limit (currently
GBP30,000).
Notes (forming part of the financial statements) continued
24 Share based payments (continued)
In addition, (both under Part I and II of the CSOP) the
aggregate exercise price of shares comprised in options granted to
a colleague under the CSOP and the PSP in any financial year shall
not exceed 150% of his/her annual salary for that year.
For the purposes of these limits, market value will be
calculated by reference to the market value of the shares on or
prior to the relevant date of grant as determined by the Board
(following consultation with the Remuneration Committee) and
subject to HMRC approval if applicable.
Part II of the CSOP provides for the grant of unapproved
options. This enables options to be granted under the same terms as
Part I of the CSOP but without complying with the particular
requirements of the legislation applicable to tax approved CSOP
Schemes. The provisions of the CSOP that do not apply under Part II
include the GBP30,000 limit and the need to seek HMRC approval for
the scheme and subsequent amendments (as applicable).
3 PSP
On 25 February 2014 the Company adopted the PSP. Awards under
the PSP were made on 17 March 2014 and annually thereafter up until
2017 after which no further awards were granted. The awards will be
exercisable between the third and tenth anniversary of the grant
date, subject to continued employment with the Group and the
satisfaction of performance conditions. These awards were granted
at nil cost.
(a) Eligibility
Only the Executive Directors, Senior Executives and certain
other senior colleagues were selected to participate in the
PSP.
(b) Grant of awards
Awards under the PSP will not form part of a colleague's
pensionable earnings. Awards are not transferable (other than on
death) without the consent of the Remuneration Committee.
(c) Exercise price
The price at which a colleague may acquire shares on the
exercise or vesting of an award under the PSP shall be determined
by the Remuneration Committee on the date of grant, and may, if the
Remuneration Committee determines, be nil or nominal value
only.
(d) Scheme limits
The number of newly issued shares over which (or in respect of
which) awards may be granted under the PSP on any date shall be
limited so that: (i) the total number of shares issued and issuable
in respect of options or awards granted in any ten year period
under the PSP and any other discretionary share option scheme of
the Company (including the CIP, RSA and the CSOP but other than to
satisfy dividend equivalent payments) is restricted to 5% of the
Company's issued shares calculated at the relevant time; and (ii)
the total number of shares issued and issuable pursuant to options
or awards granted in any ten year period under the PSP and any
other employee share scheme operated by the Company (including the
CIP, CSOP, SAYE and RSA but other than to satisfy dividend
equivalent payments) is restricted to 10% of the Company's issued
shares calculated at the relevant time.
For the purposes of these limits, no account will be taken of
options or awards granted before, on or in connection with
Admission and no account will be taken of options or awards which
have lapsed, been surrendered or otherwise become incapable of
exercise or vesting. Shares held in treasury will be treated as
newly issued shares for the purposes of these limits (as long as
this is required by institutional investor guidelines), but (for
the avoidance of doubt) shares acquired in the market will not.
(e) Individual limits
The aggregate market value of shares comprised in awards granted
to a colleague under the PSP, RSA and the CSOP in any financial
year shall not exceed 150% of their annual salary for that
year.
For the purposes of awards granted on (or before) Admission,
market value for these purposes was calculated by reference to the
Offer Price. For the purposes of awards granted following
Admission, market value for these purposes will be calculated by
reference to the market value of the shares on the relevant date of
grant as determined by the Board (following consultation with the
Remuneration Committee) in its absolute discretion.
(f) Performance
For awards granted on, or in connection with, Admission, the
performance conditions are the same as for the CIP outlined in
Section 1(d) above.
4 SAYE
On 25 February 2014, the Company adopted the SAYE (which was
registered with and self-certified with HMRC on 4 April 2015). The
rules of the SAYE were adopted pursuant to Schedule 3 of the Income
Tax (Earnings and Pensions) Act 2003 and provide for the grant of
tax approved options. In September each year, the Company issues
invitations under the rules of the SAYE which provides eligible
colleagues with an opportunity to receive share options at a 20%
discount to the market price. The maximum monthly savings is GBP500
per month. The Executive Directors have elected to participate in
the SAYE, along with 15.2% of eligible colleagues.
The options are granted once a year, and in normal circumstances
they are not exercisable until completion of a three year savings
period, beginning on 1 December each year, and will then be
exercisable for a period of six months following completion of the
relevant savings period.
(a) Eligibility
All colleagues and full-time Directors of the Group, who have
been in continuous service for such period of time (not exceeding
five years) as may be determined by the Board prior to the relevant
date of grant of an option and who are liable to UK income tax, are
eligible to participate in the SAYE.
Participation may also be offered, at the discretion of the
Board (taking account of the recommendations of the Remuneration
Committee), to other Directors or employees who otherwise do not
satisfy all of the above criteria, although Non-Executive Directors
are not eligible to participate in the SAYE.
Notes (forming part of the financial statements) continued
24 Share based payments (continued)
(b) Issue of invitations
Invitations to participate in the SAYE may be made during each
42 day period from (and including) (i) the date on which any
amendment to the SAYE is approved or adopted by the Company's
shareholders, (ii) the announcement of the Company's final or
interim results for any financial period, (iii) the occurrence of
an event which the Remuneration Committee considers to be an
non-underlying event concerning the Group or (iv) changes to the
legislation affecting tax approved SAYE option schemes coming into
effect. If any of the above periods is a 'close period' as a result
of the application of the Model Code for Securities Transactions by
Directors of Listed Companies (or as a result of the Company's
equivalent internal share dealing rules) and the Company is
prohibited from issuing invitations and/or granting options as a
result, then invitations may be made within 42 days of the end of
the close period.
Invitations may be issued by the trustee of an employee benefit
trust. No invitations may be issued or options granted more than
ten years after the adoption of the SAYE.
(c) Exercise price
The price at which an option holder may acquire shares on the
exercise of an option shall be determined by the Board but shall
not be less than the greater of 80% of the market value of a share
at the time of grant and its nominal value.
(d) Savings contract
Options may be granted by the Board or the trustee of an
employee benefit trust. Upon applying for an option, the colleague
will be required to enter into an approved savings contract with a
savings institution nominated by the Company which lasts for three
years. The maximum amount which an employee is permitted to
contribute under SAYE contracts is GBP500 per month. The Board may
set lower savings limits than this for different colleagues by
reference to objective criteria such as levels of salary or length
of service. The minimum contribution is GBP5 per month (or such
greater amount as the Board may specify, not to exceed GBP10). The
total exercise price of the shares over which the option is granted
may not exceed the aggregate of the monthly contributions and bonus
payable at the end of the colleague's related SAYE contract.
(e) Scheme limits
The number of newly issued shares over which (or in respect of
which) options may be granted under the SAYE on any date of grant
shall be limited so that the total number of shares issued or
capable of being issued in any ten year period under all the
Company's employee share schemes (including the CIP, CSOP, PSP and
RSA but other than to satisfy dividend equivalent payments) is
restricted to 10% of the Company's issued shares calculated at the
relevant time. Any options or rights to acquire shares granted
before, on or in connection with Admission will be excluded from
this limit, and no account will be taken of options or awards which
have lapsed, been surrendered or otherwise become incapable of
exercise or vesting.
(f) Exercisability
Options will normally be exercisable during a period of six
months following the allocation of a bonus under the related SAYE
contract and will normally lapse upon cessation of employment.
Earlier exercise is, however, permitted if the colleague dies or
leaves employment through injury, disability, redundancy or
retirement or where a colleague leaves employment of the Group by
reason of his employing company ceasing to be a member of the
Group, or if the undertaking in which he is employed is sold
outside the Group. Early exercise will also be permitted in the
event of a takeover, reconstructions or voluntary winding up of the
Company.
5 RSA
On 20 July 2017 the Company adopted the RSA. Awards under the
RSA were made on 20 July 2017 and annually thereafter and will be
exercisable between the third and tenth anniversary of this date,
subject to continued employment with the Group and the satisfaction
of performance conditions. These awards were granted at nil
cost.
(a) Eligibility
All colleagues, including the Executive Directors and Senior
Executives, are eligible to participate in the RSA, at the
discretion of the Remuneration Committee.
(b) Grant of awards
Awards under the RSA will not form part of a colleague's
pensionable earnings. Awards are not transferable (other than on
death) without the consent of the Remuneration Committee.
(c) Exercise price
The price at which a colleague may acquire shares on the
exercise or vesting of an award under the RSA shall be determined
by the Remuneration Committee on the date of grant, and may, if the
Remuneration Committee determines, be nil or nominal value
only.
(d) Scheme limits
The number of newly issued shares over which (or in respect of
which) awards may be granted under the RSA on any date shall be
limited so that: (i) the total number of shares issued and issuable
in respect of options or awards granted in any ten year period
under the RSA and any other discretionary share option scheme of
the Company (including the CIP, PSP and the CSOP but other than to
satisfy dividend equivalent payments) is restricted to 5% of the
Company's issued shares calculated at the relevant time; and (ii)
the total number of shares issued and issuable pursuant to options
or awards granted in any ten year period under the RSA and any
other employee share scheme operated by the Company (including the
CIP, CSOP, SAYE and PSP but other than to satisfy dividend
equivalent payments) is restricted to 10% of the Company's issued
shares calculated at the relevant time.
For the purposes of these limits, no account will be taken of
options or awards granted before, on or in connection with
Admission and no account will be taken of options or awards which
have lapsed, been surrendered or otherwise become incapable of
exercise or vesting. Shares held in treasury will be treated as
newly issued shares for the purposes of these limits (as long as
this is required by institutional investor guidelines), but (for
the avoidance of doubt) shares acquired in the market will not.
(e) Individual limits
The aggregate market value of shares comprised in awards granted
to a colleague under the RSA, PSP and the CSOP in any financial
year shall not exceed 150% of their annual salary for that year.
Market value for these purposes will be calculated by reference to
the market value of the shares on the relevant date of grant as
determined by the Board (following consultation with the
Remuneration Committee) in its absolute discretion.
Notes (forming part of the financial statements) continued
24 Share based payments (continued)
Fair value of share awards
The expected volatility is based on historical volatility of a
peer group of companies over a relevant period prior to award. The
expected life is the average expected period to exercise, which has
been taken as three years. The risk free rate of return is the
yield on zero-coupon UK government bonds with a life equal to this
expected life.
Options are valued using a Black-Scholes option-pricing model
for the non-market based (EPS element) performance conditions and a
Monte-Carlo simulation for the market-based (TSR element)
performance conditions.
Special provisions allow early exercise in the case of death,
injury, disability, redundancy, retirement or because the Company
which employs the option holder ceases to be part of the Group or
in the event of a change in control, reconstruction or winding up
of the Company.
The key assumptions used in the fair value of the awards were as
follows:
RSA CIP PSP
2019 2018 2017 2015 2017 2016 2015
At grant date
Share price GBP1.87 GBP1.37 GBP1.58 GBP2.45 GBP2.59 GBP2.75 GBP2.45
Exercise price GBP0.0 GBP0.00 GBP0.00 GBP0.00 GBP0.00 GBP0.00 GBP0.00
Expected volatility 32% 32% 32% 30% 32% 30% 30%
Option life (years) 10 10 10 3 10 10 10
Expected dividend yield 2.00% 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Risk free interest rate n/a n/a n/a n/a 0.50% 1.07% 1.07%
Weighted average fair value of GBP1.87 GBP1.37 GBP1.58 GBP2.06 GBP2.06 GBP2.06 GBP2.06
options granted
CSOP SAYE
2017 2016 2015 2019 2018 2017
At grant date
Share price GBP2.59 GBP2.75 GBP2.31 GBP2.37 GBP1.17 GBP1.97
Exercise price GBP2.59 GBP2.75 GBP2.31 GBP1.98 GBP0.94 GBP1.57
Expected volatility 32% 32% 37% 30% 32% 32%
Option life (years) 10 10 10 3 3 3
Expected dividend yield 2.00% 2.00% 2.00% 2.00% 2.00% 2.00%
Risk free interest
rate 0.50% 2.25% 2.25% 0.20% 0.20% 0.20%
Weighted average fair GBP0.65 GBP0.89 GBP0.75 GBP0.78 GBP0.39 GBP0.61
value of options granted
As both the RSA and PSP awards have a nil exercise price the
risk free rate of return does not have any effect on the estimated
fair value.
Movements in awards under share based payment schemes:
CIP PSP CSOP SAYE RSA Total
000 000 000 000 000 000
Outstanding at
start of year 86 1,835 4,132 5,446 6,411 17,910
Granted - - - 604 2,835 3,439
Forfeited - (1,827) (762) (941) (1,944) (5,474)
Exercised (35) - (1,174) (108) (2) (1,319)
Lapsed - - - - - -
Outstanding at
end of year 51 8 2,196 5,001 7,300 14,556
Weighted average
exercise price - - 2.59 1.12 - NA
The Group income statement charge recognised in respect of share
based payments for the current period is GBP4.2m (2019:
GBP3.5m).
Notes (forming part of the financial statements) continued
25 Commitments
Capital commitments
At 26 March 2020, the Group is committed to incur capital
expenditure of GBP3.7m (28 March 2019: GBP5.0m). Capital
commitments predominantly relate to the cost of investment in new
IT systems and refurbishment of Pets at Home stores.
At 26 March 2020, the Group has committed to provide funding to
related party Joint Venture companies of GBPnil (28 March 2019:
nil) which remains undrawn.
At 26 March 2020, the Group has a commitment to increase the
loan funding to Joint Venture companies of GBP0.8m (28 March 2019:
GBP1.4m), this increase in funding is written into the Joint
Venture agreements and becomes payable when certain criteria are
met.
Notes (forming part of the financial statements) continued
26 Contingencies
Veterinary practices
Provisions are maintained by the Group, where necessary, against
certain balances held with the veterinary practices. During the
period, the Group also had in place certain guarantees over the
bank loans taken out by a number of veterinary practice companies
in which it holds an investment in non-participatory share capital.
At the end of the period, the total amount of bank overdrafts and
loans guaranteed by the Group amounted to GBP10.9m (28 March 2019:
GBP10.8m).
The Group is a guarantor for the lease for veterinary practices
that are not located within Pets at Home stores. The Group is also
a guarantor to a small number of third parties where the lease has
been reassigned.
Exemption from audit by parent guarantee
The following wholly owned subsidiaries of the Company are
covered by a guarantee provided by Pets at Home Group Plc and are
consequently entitled to an exemption under s479A from the
requirement of the Act relating to the audit of individual
accounts. Under this guarantee, the Group will guarantee all
outstanding liabilities of these entities. No liability is expected
to arise under the guarantee. The entities covered by this
guarantee are disclosed below.
Company Registered number
Aberdeen Vets4Pets Limited 09393267
Aberdeen North Vets4Pets
Limited 11024679
Alton Vets4Pets Limited 09639868
Andover Vets4Pets Limited 08132407
Companion Care (Ballymena)
Limited 08294444
Bearsden Vets4Pets Limited 07780175
Bedminster Vets4Pets Limited 09267870
Belfast Stormont Vets4Pets
Limited 09022077
Bicester Vets4Pets Limited 10285804
Blackpool Squires Gate Vets4Pets
Limited 09578581
Bonnyrigg Vets4Pets Limited 10757330
Borehamwood Vets4Pets Limited 09319066
Bourne Vets4Pets Limited 10200670
Bracknell Vets4Pets Limited 10605544
Bramley Vets4Pets Limited 04238788
Carmarthen Vets4Pets Limited 09498169
Clitheroe Vets4Pets Limited 09878308
Corby Vets4Pets Limited 08163294
Craigavon Vets4Pets Limited 08846831
Davidsons Mains Vets4Pets
Limited 07726992
Doncaster Vets4Pets Limited 04335358
Dorchester Vets4Pets Limited 08708025
East Kilbride Vets4Pets Limited 09628917
Ellesmere Port Vets4Pets
Limited 09725644
Evesham Vets4Pets Limited 09269582
Companion Care (Exeter) Limited 04930076
Companion Care (Exeter Marsh)
Limited 08314727
Barnwood Vets4Pets Limited 08562941
Haverfordwest Vets4Pets Limited 09485504
Inverurie Vets4Pets Limited 11056047
Kilmarnock Vets4Pets Limited 08850288
Companion Care (Kirkcaldy)
Limited 07680864
Leeds Kirkstall Vets4Pets
Limited 10291543
Leicester St Georges Vets4Pets
Limited 09881176
Linlithgow Vets4Pets Limited 09966547
Liverpool OS Vets4Pets Limited 06959208
Companion Care (Speke) Limited 07149744
Companion Care (Macclesfield)
Limited 08285995
Notes (forming part of the financial statements) continued
26 Contingencies (continued)
Company Registered number
Companion Care (Maidstone)
Limited 05094399
Maidstone Vets4Pets Limited 05171954
Malvern Vets4Pets Limited 10516552
Market Harborough Vets4Pets
Limited 10602806
Marlborough Vets4Pets Limited 09869384
Monmouth Vets4Pets Limited 10756991
Musselburgh Vets4Pets Limited 10425760
Companion Care (Newport)
Limited 08425358
Newton Mearns Vets4Pets Limited 07957431
Pentland Vets4Pets Limited 09360949
Companion Care (Perth) Limited 08285928
Prescot Vets4Pets Limited 08878815
Redditch Vets4Pets Limited 05612150
Sheffield Drakehouse Vets4Pets
Limited 08790953
Sheldon Vets4Pets Limited 08822150
Companion Care (Slough) Limited 07427613
St Neots Vets4Pets Limited 09811640
Companion Care (Stevenage)
Limited 08282080
Companion Care (Stratford-upon-Avon)
Limited 07329166
Sudbury Vets4Pets Limited 09916308
Thamesmead Vets4Pets Limited 09881179
Tiverton Vets4Pets Limited 11023079
Uttoxeter Vets4Pets Limited 11145982
Wellingborough Vets4Pets
Limited 07620413
Wokingham Vets4Pets Limited 09869355
Wrexham Vets4Pets Limited 07103838
Yeovil Vets4Pets Limited 08080466
Vets4Pets Services Limited 05055601
Vets4Pets Veterinary Group
Limited 04263054
Notes (forming part of the financial statements) continued
27 Related parties
Joint Venture veterinary practice transactions
The Group has entered into a number of arrangements with third
parties in respect of veterinary practices. These veterinary
practices are deemed to be related parties due to the factors
explained in note 1.4.
Financial commitments provided to related party veterinary
practices for funding are set out in note 25.
During the period, the Group had in place certain guarantees
over the bank loans taken out by a number of veterinary practice
companies in which it holds an investment in non-participatory
share capital. At the end of the period, the total amount of bank
overdrafts and loans guaranteed by the Group amounted to GBP10.9m
(28 March 2019: GBP10.8m).
The transactions entered into during the period and the balances
outstanding at the end of the period are as follows:
26 March 28 March
2020 GBPm 2019 GBPm
----------------------------------------------------------- ---------- ----------
Transactions
- Fees for services provided to Joint Venture veterinary
practices 54.7 55.0
- Rental and other occupancy charges to Joint Venture
veterinary practices 12.2 12.7
---------- ----------
Total income from Joint Venture veterinary practices 66.9 67.7
Acquisitions
- Consideration for Joint Venture veterinary practices
acquired (note 10) 1.3 3.1
Balances
Included within trade and other receivables (note 17):
- Funding for new practices 1.6 0.3
- Operating loans
- Gross value of operating loans 37.5 42.2
- Allowance for expected credit losses held for operating
loans (8.0) (14.3)
---------- ----------
- Net operating loans 29.5 27.9
Included within other financial assets and liabilities
(note 16):
- Loans to Joint Venture veterinary practices - initial
set up loans
- Gross value of initial set up loans 13.3 14.4
- Allowance for expected credit losses held for initial
set up loans - (1.1)
---------- ----------
- Net initial set up loans 13.3 13.3
- Loans to other related parties - other loans
- Gross value of other loans 4.0 5.0
- Allowance for expected credit losses held for other
loans - (1.1)
---------- ----------
- Net other loans 4.0 3.9
Included within trade and other payables (note 20):
- Trading balances (6.7) (4.0)
Total amounts receivable from veterinary practices (before
provisions) 49.7 57.9
Fees for services provided to related party veterinary practices
are included within revenue and relate to charges for support
services offered in such areas as clinical development, promotion
and methods of operation as well as service activities including
accountancy, legal and property. In accordance with IFRS 15,
revenue in the 52 week period ended 26 March 2020 and the 52 week
period ended 28 March 2019 excludes irrecoverable fee income from
Joint Venture veterinary practices.
Funding for new practices represents the amounts advanced by the
Group to support veterinary practice opening costs. The funding is
short term and the related party Joint Venture veterinary practice
draws down their own bank funding to settle these amounts
outstanding with the Group shortly after opening.
Trading balances represent costs incurred and income received by
the Group in relation to the services provided to the Joint Venture
veterinary practices that have yet to be recharged.
Notes (forming part of the financial statements) continued
27 Related parties (continued)
Operating loans represent amounts advanced to related party
Joint Venture veterinary practices to support their working capital
requirements and longer term growth. The loans advanced to the
practices are interest free and either repayable on demand or
repayable within 90 days of demand. No facility exists and the
levels of loans are monitored in relation to review of the
practices performance against business plan. Based on the projected
cash flow forecast on a practice by practice basis, the funding is
often expected to be required for a number of years. As practices
generate cash on a monthly basis it is applied to the repayment of
brought forward operating loans. For immature practices, loan
balances may increase due to operating requirements. The balances
above are shown net of allowances for expected credit losses held
for operating loans of GBP8.0m (28 March 2019: GBP14.3m).
In the 52 week period ended 26 March 2020, the value of loans
written off recognised in the income statement amounted to GBP9.0m,
which relates to operating loans (GBP7.2m), initial set up loans
(GBP1.1m) and other loans (GBP0.7m). In the 52 week period ended 28
March 2019 the value of loans written off recognised in the income
statement amounted to GBP12.6m, which relates to operating loans
(GBP10.7m), initial set up loans (GBP1.5m) and other loans
(GBP0.4m).
At 26 March 2020, the Group has committed to provide funding to
related party Joint Venture companies of GBPnil (28 March 2019:
nil) which remains undrawn.
At 26 March 2020, the Group had a commitment to increase the
loan funding to Joint Venture companies of GBP0.8m (28 March 2019:
GBP1.4m), this increase in funding is written into the Joint
Venture agreements and becomes payable when certain criteria are
met.
The Group is a guarantor for the lease for veterinary practices
that are not located within Pets at Home stores.
Other related party loans
Included within trade and other receivables (note 17) is a loan
to Pure Pet Food Ltd of GBP40,000 which has been provided to
support working capital requirements. The loan incurs interest at
LIBOR + 3.2% and is repayable within the next 12 months.
Key management personnel
Details of remuneration paid to key management personnel are set
out in note 4.
28 Investments in subsidiaries
Company
Investments
in subsidiaries
GBPm
----------------
At 26 March 2020 936.2
----------------
Impairment testing
The market capitalisation of the Company as at 26 March 2020 is
lower than the carrying value of net assets, which is considered to
be an indicator of impairment. Management have considered this, in
conjunction with the full impairment review which been undertaken
on the Group's cash generating units of which the Company's
investments form part. The results of this review are disclosed in
note 13, including a sensitivity analysis. In this review, the
goodwill on consolidation balance of GBP981.2m at 26 March 2020
exceeds the investments held in subsidiary undertakings of
GBP936.2m, and therefore management have concluded that under IAS
36, no impairment has been identified with regard to the Company's
investments in subsidiaries.
Registered office address
Pets at Home (Asia) Limited: Units 704 5A, 7/F, Tower B,
Manulife Financial Centre, 223-231 Wai Yip Street, Kwun Tong,
Kowloon, Hong Kong
PAH Pty Limited: Herbert Greer and Rundle, Level 21, 385 Bourke
Street, Melbourne, VIC 3000, Australia
Pure Pet Food Limited: Unit 6, Brookmills Saddleworth Road,
Greetland, Halifax, West Yorkshire, England, HX4 8LZ
Dog Stay Limited: 305 Regents Park Road, Finchley, London,
United Kingdom, N3 1DP
The registered office of all the remaining companies in which
the Group has an interest in the share capital is Epsom Avenue,
Stanley Green, Handforth, Cheshire, SK9 3RN.
Group
Details of the subsidiary undertakings are as follows:
In the 52 week period ended 26 March 2020, the Group has
acquired 100% of the 'A' shares of 28 companies. These practices
were previously accounted for as Joint Venture veterinary practices
as the Group held 100% of the non-participatory 'B' ordinary
shares. Acquisition of the 'A' shares has led to the control and
consolidation of these companies. A detailed explanation for the
basis of consolidation can be found in note 1.
Further details of the acquisitions can be found in note 10.
Country Class of At 26 March At 28 March
Company Holding of incorporation shares held 2020 % 2019 %
------------- -----------
Dick White Referrals Limited Indirect United Kingdom Ordinary 91 76
Eye-Vet Limited Indirect United Kingdom Ordinary 100 100
Anderson Moores Veterinary Specialists
Ltd Indirect United Kingdom Ordinary 100 75
Brand Development Limited Indirect Guernsey Ordinary 100 100
Companion Care (Services) Limited Indirect United Kingdom Ordinary 100 100
Companion Care Management Services
Limited Indirect United Kingdom Ordinary 100 100
Les Boues Limited Indirect Jersey Ordinary 100 100
Northwest Veterinary Specialists
Limited Indirect United Kingdom Ordinary 100 100
PAH Pty Limited Indirect Australia Ordinary 100 100
Pet Investments Limited Indirect United Kingdom Ordinary 100 100
Pets at Home (Asia) Limited Indirect Hong Kong Ordinary 100 100
PAH Financial Services Limited Indirect United Kingdom Ordinary 100 100
Pets at Home Holdings Limited Indirect United Kingdom Ordinary 100 100
Pets at Home Limited Indirect United Kingdom Ordinary 100 100
Pets at Home No.1 Limited Direct United Kingdom Ordinary 100 100
Pets at Home Superstores Limited Indirect United Kingdom Ordinary 100 100
Pets at Home Veterinary Specialist
Group Limited Indirect United Kingdom Ordinary 100 100
Pets at Home Vets Group Limited Indirect United Kingdom Ordinary 100 100
Pets at Home (ESOT) Limited Indirect United Kingdom Ordinary 100 100
Pet City Holdings Limited Indirect United Kingdom Ordinary 100 100
Pet City Limited Indirect United Kingdom Ordinary 100 100
Pet City Resources Limited Indirect United Kingdom Ordinary 100 100
Vets4Pets (Services) Limited Indirect United Kingdom Ordinary 100 100
Vets4Pets Holdings Limited Indirect Guernsey Ordinary 100 100
Vets4Pets I.P. Limited Indirect Guernsey Ordinary 100 100
Vets4Pets Services Limited Indirect United Kingdom Ordinary 100 100
Vets4Pets UK Limited Indirect United Kingdom Ordinary 100 100
Vets4Pets Limited Indirect Guernsey Ordinary 100 100
Vets4Pets Veterinary Group Limited Indirect United Kingdom Ordinary 100 100
Veterinary Specialists (Scotland)
Limited Indirect United Kingdom Ordinary 94 100
Aberdeen North Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Aberdeen Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Addlestone Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Alton Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Andover Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Aylesbury Berryfields Vets4Pets
Limited Indirect United Kingdom Ordinary 100 100
Barnwood Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Bearsden Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Bedminster Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Belfast Stormont Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Bicester Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Bishop Auckland Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Blackpool Squires Gate Vets4Pets
Limited Indirect United Kingdom Ordinary 100 100
Bodmin Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Bolton Central Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Bonnyrigg Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Borehamwood Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Bourne Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Bracknell Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Bradford Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Bramley Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Bramley Vets4Pets (Newco) Limited Indirect United Kingdom Ordinary 100 100
Bridlington Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Bromborough Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Cambridge Perne Road Vets4Pets
Limited Indirect United Kingdom Ordinary 100 100
Canvey Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Carmarthen Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Chorley Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Clitheroe Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Coalville Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Colchester Layer Road Vets4Pets
Limited Indirect United Kingdom Ordinary 100 100
Companion Care (Ballymena) Limited Indirect United Kingdom Ordinary 100 100
Companion Care (Exeter Marsh)
Limited Indirect United Kingdom Ordinary 100 100
Companion Care (Exeter) Limited Indirect United Kingdom Ordinary 100 100
Companion Care (Kendal) Limited Indirect United Kingdom Ordinary 100 100
Companion Care (Kirkcaldy) Limited Indirect United Kingdom Ordinary 100 100
Companion Care (Macclesfield)
Limited Indirect United Kingdom Ordinary 100 100
Companion Care (Maidstone) Limited Indirect United Kingdom Ordinary 100 50
Companion Care (Newport) Limited Indirect United Kingdom Ordinary 100 50
Companion Care (Nottingham) Limited Indirect United Kingdom Ordinary 100 100
Companion Care (Perth) Limited Indirect United Kingdom Ordinary 100 50
Companion Care (Slough) Limited Indirect United Kingdom Ordinary 100 100
Companion Care (Speke) Limited Indirect United Kingdom Ordinary 100 100
Companion Care (Stevenage) Limited Indirect United Kingdom Ordinary 100 50
Companion Care (Stratford-Upon-Avon)
Limited Indirect United Kingdom Ordinary 100 100
Corby Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Coventry Canley Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Craigavon Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Crosby Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Cumbernauld Vets4Pets Limited Indirect United Kingdom Ordinary 100 -
Davidsons Mains Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Doncaster Vets4Pets Limited Indirect United Kingdom Ordinary 100 60
Dorchester Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Dundee Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
East Grinstead Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
East Kilbride South Vets4Pets
Limited Indirect United Kingdom Ordinary 100 50
Ellesmere Port Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Evesham Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Falkirk Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Feltham Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Gillingham Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Great Yarmouth Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Haverfordwest Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Heanor Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Hemsworth Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Hexham Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Horden Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Hucknall Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Inverness Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Inverurie Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Kilmarnock Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Kingswood Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Leamington Spa Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Leeds Kirkstall Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Leicester St Georges Vets4Pets
Limited Indirect United Kingdom Ordinary 100 50
Leven Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Linlithgow Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Littleover Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Liverpool OS Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Long Eaton Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Maidstone Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Malvern Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Market Harborough Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Marlborough Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Melton Mowbray Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Mexborough Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Milton Keynes Broughton Vets4Pets
Limited Indirect United Kingdom Ordinary 100 100
Monmouth Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Musselburgh Vet4sPets Limited Indirect United Kingdom Ordinary 100 50
Newark Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Newbury Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Newhaven Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Newton Mearns Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Norwich Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Nottingham Castle Marina Vets4Pets
Limited Indirect United Kingdom Ordinary 100 100
Pentland Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Perth Vets4Pets Limited Indirect United Kingdom Ordinary 100 -
Peterlee Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Poynton Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Prescot Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Redditch Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Ripon Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Salford Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Scunthorpe Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Selby Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Sheffield Drakehouse Vets4Pets
Limited Indirect United Kingdom Ordinary 100 100
Sheffield Heeley Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Sheldon Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Shepton Mallet Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
St Austell Vets4Pets Limited Indirect United Kingdom Ordinary 95 95
St Neots Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Stocksbridge Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Stoke-On-Trent Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Sudbury Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Teesside Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Thamesmead Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
The Heart of Dulwich Veterinary
Care Limited Indirect United Kingdom Ordinary 100 100
Thornbury Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Tiverton Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Uckfield Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Uttoxeter Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Warrington Winnick Vets4Pets
Limited Indirect United Kingdom Ordinary 100 100
Wellingborough Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
West Drayton Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Whitstable Vets4Pets Limited Indirect United Kingdom Ordinary 100 -
Wokingham Vets4Pets Limited Indirect United Kingdom Ordinary 100 50
Wrexham Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
Yeovil Vets4Pets Limited Indirect United Kingdom Ordinary 100 100
------------- -----------
Investments in Joint Venture practices and other investments
The Group holds an indirect interest in the share capital of the
following companies:
Country Class of At 26 March At 28 March
Company Holding of incorporation shares held 2020 % 2019 %
------------- ----------- -----------
Abingdon Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
ABTW Limited Indirect United Kingdom Ordinary 50 50
Accrington Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Airdrie Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Alsager Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Altrincham Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Amesbury Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bagshot Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bangor Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bangor Wales Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Barnsley Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Barnstaple Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Barry Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bath Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bedford Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bedlington Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Beeston Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Beverley Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Biggleswade Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bishops Stortford Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bishopston Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bitterne Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Blackburn Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Blackheath Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Blackpool Warbreck Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Blackwood Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bolton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bradford Idle Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Brighouse Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bristol Emerson Green Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Bristol Imperial Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bristol Kingswood Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bristol Longwell Green Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Bromsgrove Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Buckingham Vets4Pets Limited Indirect United Kingdom Ordinary 50 90
Bulwell Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Burscough Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Burton-On-Trent Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bury St Edmunds Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Bury Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Byfleet Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Caerphilly Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Camborne Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Cannock Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Canterbury Sturry Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Cardiff Ely Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Cardiff Newport Road Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Carlisle Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Carrickfergus Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Castleford Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Catterick Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Cc (Rustington) Newco Limited Indirect United Kingdom Ordinary 50 -
Chadwell Heath Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Cheadle Hulme Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Chester Caldy Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Chester Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Chesterfield Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Cirencester Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Clevedon Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Cleveleys Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Clifton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Clowne Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Colne Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Aintree) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Andover) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Ashford) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Ashton) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Aylesbury) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Ayr) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Banbury) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Barnsley Cortonwood)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Basildon Pipps
Hill) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Basildon) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Basingstoke)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Beckton) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Bedford) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Belfast) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Bishopbriggs)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Bletchley) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Bolton) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Bournemouth)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Braintree) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Brentford) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Bridgend) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Bridgwater) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Brislington)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Bristol Filton)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Broadstairs)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Burgess Hill)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Cambridge Beehive)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Cambridge) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Cannock) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Canterbury) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Cardiff) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Charlton) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Chatham) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Chelmsford) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Cheltenham) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Chesterfield)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Chichester) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Chingford) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Chippenham) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Christchurch)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Colchester) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Corstorphine)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Coventry Walsgrave)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Cramlington)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Crawley) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Crayford) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Croydon) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Derby Kingsway)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Derby) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Dunstable) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Eastbourne) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Ely) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Enfield) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Falmouth) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Fareham Collingwood)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Fareham) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Farnborough)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Farnham) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Folkestone) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Fort Kinnaird)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Friern Barnet)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Gloucester) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Harlow) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Hatfield) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Hemel Hempstead)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (High Wycombe)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Hove) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Huddersfield)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Huntingdon) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Ilford) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Ipswich Martlesham)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Keighley) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Kidderminster)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Kings Lynn) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Leicester Beaumont
Leys) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Leicester Fosse
Park) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Leighton Buzzard)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Linwood) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Lisburn) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Liverpool Penny
Lane) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Livingston) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Llantrisant)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Merry Hill) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Milton Keynes)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (New Malden) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Newbury) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Newcastle Kingston
Park) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Northampton Nene
Valley) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Norwich Hall
Road) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Norwich Longwater)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Norwich) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Oldbury) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Oldham) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Orpington) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Oxford) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Peterborough
Bretton) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Peterborough)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Plymouth) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Poole) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Portsmouth) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Preston Capitol)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Pudsey) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Reading) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Redditch) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Redhill) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Romford) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Rotherham) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Rustington) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Salisbury) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Scarborough)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Southampton)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Southend-On-Sea)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Stirling) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Stockport) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Stoke Festival
Park) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Swansea) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Swindon) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Tamworth) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Taunton) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Telford) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Truro) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Tunbridge Wells)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Wakefield) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Weston-Super-Mare)
Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Winchester) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Winnersh) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Woking) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Woolwell) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Worcester) Limited Indirect United Kingdom Ordinary 50 50
Companion Care (Wrexham Holt
Road) Limited Indirect United Kingdom Ordinary 50 50
Craigleith Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Crescent Link Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Crewe Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Cross Hands Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Dagenham Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Darlington Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Daventry Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Denbigh Vets4Pets Limited Indirect United Kingdom Ordinary 50 100
Denton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Dewsbury Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Dog Stay Limited Indirect United Kingdom Ordinary 12 -
Dover Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Droitwich Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Drumchapel Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Dudley Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Dumbarton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Dunfermline Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Durham Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
East Kilbride Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Eastleigh Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Eastwood Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Eccleshill Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Epsom Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Filton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Gamston Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Gateshead Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Glasgow Forge Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Glasgow Pollokshaws Vets4Pets
Limited Indirect United Kingdom Ordinary 50 100
Goldenhill Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Gosport Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Grantham Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Gravesend Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Greasby Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Greenford Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Grimsby Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Guernsey Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Halesowen Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Halifax Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Hamilton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Harrogate New Park Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Harrogate Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Hartlepool Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Hastings Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Havant Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Haverhill Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Hayling Island Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Hedge End Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Hemel Hempstead Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Hendon Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Hereford Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Hertford Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
High Wycombe Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Hinckley Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Huddersfield Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Hull Anlaby Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Hull Stoneferry Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Hull Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Ilkeston Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Ipswich Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Irvine Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Kendal Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Kettering Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Kidderminster Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Kirkby in Ashfield Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Lancaster Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Larne Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Launceston Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Leeds Birstall Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Leeds Colton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Leeds Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Leigh Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Leigh-On-Sea Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Letchworth Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Leyland Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Lichfield Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Lincoln South Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Lisburn Longstone Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Llandudno Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Llanelli Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Llanrumney Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Longton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Loughborough Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Loughton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Luton Gipsy Lane Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Luton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Lytham Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Maidenhead Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Maldon Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Mansfield Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Mapperley Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Merthyr Tydfil Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Middlesbrough Cleveland Park
Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Middlesbrough Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Middleton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Millhouses Vets4Pets Limited Indirect United Kingdom Ordinary 50 -
Morpeth Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
New Milton Vets4pets Limited Indirect United Kingdom Ordinary 50 50
Newcastle-Upon-Tyne Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Newmarket Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Newport Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Newton Abbot Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Newtownabbey Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Newtownards Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
North Tyneside Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Northallerton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Northampton Riverside Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Northampton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Northwich Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Nottingham Chilwell Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Nottingham Netherfield Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Nuneaton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Oadby Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Old Kent Road Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Oxford Cowley Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Paisley Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Penrith Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Penzance Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Peterborough Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Pontypridd Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Poole Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Portishead Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Portsmouth Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Prenton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Preston Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Prestwich Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Pure Pet Food Ltd Indirect United Kingdom Ordinary 19 19
Quinton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Rawtenstall Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Rayleigh Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Rhyl Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Richmond Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Rochdale Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Rotherham Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Rugby Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Rugby Central Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Ruislip Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Runcorn Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Rushden Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Saffron Walden Vets4Pets Limited Indirect United Kingdom Ordinary 50 100
Selly Oak Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Sevenoaks Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Sheffield Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Sheffield Wadsley Bridge Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Shelfield Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Shrewsbury Meole Brace Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Shrewsbury Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Sidcup Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Sittingbourne Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Solihull Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Somercotes Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
South Shields Quays Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
South Shields Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Southampton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Southend Airport Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Southend-On-Sea Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Southport Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
St Albans Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
St Helens Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Stafford Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Stechford Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Stockton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Stourbridge Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Street Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Sunderland South Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Sunderland Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Sutton Coldfield Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Sutton In Ashfield Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Swindon Bridgemead Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Swinton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Sydenham Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Telford Madeley Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Thurrock Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Tilehurst Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Torquay Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Totton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Trafford Park Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Trowbridge Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Wakefield Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Walkden Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Wallasey Bidston Moss Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Walsall Reedswood Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Waltham Abbey Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Walton on Thames Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Walton Vale Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Warminster Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Warrington Riverside Vets4Pets
Limited Indirect United Kingdom Ordinary 50 50
Warrington Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Washington Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Waterlooville Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Watford Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
West Bromwich Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Weymouth Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Widnes Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Wigan Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Wimbledon Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Wolverhampton Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Worksop Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Worthing Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
WSM Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
Yate Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
York Clifton Moor Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
York Vets4Pets Limited Indirect United Kingdom Ordinary 50 50
------------- ----------- -----------
During the 52 week period ended 26 March 2020, the Group has
sold 100% of the 'A' shares in a number of companies which were
previously classified as subsidiaries, and subsequent to sale of
the 'A' shares, have been accounted for as Joint Venture veterinary
practices, which has led to the reduction in the holding in 4
entities listed above to 50% investment. The 'A' shares in these
entities were sold for consideration equal to the net book value of
the assets and liabilities, and therefore there was no profit or
loss on disposal.
Notes (forming part of the financial statements) continued
29 IFRS 16 transition note
The Group has adopted IFRS 16 Leases on 29 March 2019 using the
modified retrospective approach. The cumulative effect of adopting
IFRS 16 has been recognised as an adjustment to the opening balance
sheet as at 29 March 2019, with no restatement of comparable
information and no impact on retained earnings.
Under the modified retrospective approach the opening
right-of-use asset can be measured one of two ways;
a) as if the Group had applied IFRS 16 since the commencement
date using its incremental borrowing rate at the date of initial
application
b) measured at an amount equal to the lease liability at the date of initial application
The Group elects to measure the right-of-use asset at an amount
equal to the lease liability at the date of initial application.
The opening right-of-use asset is adjusted for remaining deferred
income relating to landlord incentives and rent free periods, in
addition to any outstanding prepayments in relation to the
leases.
As part of the initial transition, the Group has elected to
apply the relief option which allows it to adjust the right-of-use
asset by the amount of any provision for onerous leases recognised
in the balance sheet, immediately before the date of initial
application.
The Group applies the practical expedient, not to reassess
whether a contract is or contains a lease at the date of initial
application. This means the Group applies IFRS 16 to all contracts
entered into before 29 March 2019 and identified as leases in
accordance with IAS 17 and IFRIC 4.
The Group has elected to use the exemptions proposed by the
standard on lease contracts for which the lease term ends within 12
months as of the date of initial application, except for leases
which are expected to be renewed or replaced by a lease with a term
greater than 12 months. These leases are accounted for as
short-term leases and the lease payments associated with them are
recognised as an expense.
The impact on the consolidated income statement in the 52 week
period ended 26 March 2020 is as follows:
52 week period ended 52 week period ended
26 March 2020 (excluding 26 March 2020 (including
IFRS 16 adjustments) IFRS 16 adjustments)
Non-underlying Non-underlying
Underlying items IFRS 16 Underlying items
trading (note 3) Total adjustment trading (note 3) Total
Note GBPm GBPm GBPm GBPm GBPm GBPm GBPm
-------------- ---------- -------------- -------
Revenue 2 1,058.8 - 1,058.8 - 1,058.8 - 1,058.8
Cost of sales (540.0) (6.9) (546.9) - (540.0) (6.9) (546.9)
Impairment losses
on receivables 3,17 (0.9) 0.3 (0.6) - (0.9) 0.3 (0.6)
--------------
Gross profit 517.9 (6.6) 511.3 - 517.9 (6.6) 511.3
Selling and distribution
expenses (321.8) - (321.8) 8.0 (313.8) - (313.8)
Administrative expenses 3 (92.8) (1.0) (93.8) - (92.8) (1.0) (93.8)
-------------- --------------
Operating profit 2,3 103.3 (7.6) 95.7 8.0 111.3 (7.6) 103.7
Financial income 6 0.4 - 0.4 0.1 0.5 - 0.5
Financial expense 7 (4.2) - (4.2) (14.1) (18.3) - (18.3)
-------------- --------------
Net financing expense (3.8) - (3.8) (14.0) (17.8) - (17.8)
-------------- --------------
Profit before tax 99.5 (7.6) 91.9 (6.0) 93.5 (7.6) 85.9
Taxation 8 (19.8) 0.1 (19.7) 1.2 (18.6) 0.1 (18.5)
Profit for the period (i) 79.7 (7.5) 72.2 (4.8) 74.9 (7.5) 67.4
-------------- --------------
Notes (forming part of the financial statements) continued
29 IFRS 16 transition note (continued)
The impact on the statement of financial position as at 29 March
2019 is as follows:
At 28 March At 29 March
2019 IFRS 16 2019
GBPm adjustment GBPm
-----------
Non-current assets
Property, plant and
equipment 123.7 - 123.7
Right-of-use assets (ii) - 473.1 473.1
Intangible assets 1,000.7 - 1,000.7
Other non-current assets (iii) 18.7 1.7 20.4
-----------
1,143.1 474.8 1,617.9
Current assets
Inventories 68.2 - 68.2
Other financial assets (iii) 1.6 0.7 2.3
Trade and other receivables (v) 68.9 (9.4) 59.5
Cash and cash equivalents 60.5 - 60.5
-----------
199.2 (8.7) 190.5
-----------
Total assets 1,342.3 466.1 1,808.4
-----------
Current liabilities
Trade and other payables (v) (185.8) 5.0 (180.8)
Corporation tax (10.2) - (10.2)
Lease liabilities (iv) - (82.7) (82.7)
Provisions (v) (15.4) 1.9 (13.5)
Other financial liabilities (7.3) - (7.3)
(218.7) (75.8) (294.5)
-----------
Non-current liabilities
Other interest-bearing
loans and borrowings (178.8) - (178.8)
Other payables (v) (33.6) 32.4 (1.2)
Lease liabilities (iv) - (423.5) (423.5)
Provisions (v) (1.7) 0.8 (0.9)
Other financial liabilities (2.5) - (2.5)
Deferred tax liabilities (4.0) - (4.0)
-----------
(220.6) (390.3) (610.9)
-----------
Total liabilities (439.3) (466.1) (905.4)
-----------
Net assets 903.0 - 903.0
-----------
Equity attributable
to equity holders of
the parent
Ordinary share capital 5.0 - 5.0
Consolidation reserve (372.0) - (372.0)
Merger reserve 113.3 - 113.3
Translation reserve (0.0) - (0.0)
Cash flow hedging reserve 0.8 - 0.8
Retained earnings 1,155.9 - 1,155.9
-----------
Total equity 903.0 - 903.0
-----------
Notes (forming part of the financial statements) continued
29 IFRS 16 transition note (continued)
(i) Income statement
Under previous lease accounting standards (IAS 17), lease costs
were recognised on a straight line basis over the term of the
lease. The Group recognised these costs within operating expenses,
and costs of GBP79.1m would have been recognised in the 52 week
period ended 26 March 2020 if IAS 17 had still been applied. Under
IFRS 16 these costs have been removed and replaced with
depreciation of the right-of-use assets, which has resulted in a
depreciation charge of GBP71.1m and a net impact to profit before
tax of GBP6.0m for the 52 week period ended 26 March 2020.
The impact on net financing expense in the 52 week period ended
26 March 2020 was GBP14.0m.
The net impact of applying IFRS 16 to the profit for the period
in the 52 week period ended 26 March 2020 was a reduction of
GBP4.8m after tax.
This difference to profit for the period represents a timing
difference in the recognition of costs under IFRS 16 compared to
IAS 17. IAS 17 recognises costs on a straight line basis, whereas
under IFRS 16 finance charges are recognised in relation to the
value of the lease liability and costs will therefore reduce as the
liability reduces.
(ii) Right-of-use assets
A right-of-use asset is recognised under IFRS 16, representing
the Group's contractual right to access an identified asset under
the terms of the lease contract.
(iii) Other non-current assets
Sublease assets have been recognised in respect of finance
leases under IFRS 16 for a number of the properties which are
subleased to third parties. The finance lease is assessed by
reference to the right-of-use asset under the head lease rather
than the underlying asset. A number of subleases continue to be
accounted for as operating leases which has resulted in no change
to their accounting treatment under IFRS 16.
(iv) Lease liabilities
A lease liability is recognised under IFRS 16, representing the
Group's contractual obligation to minimum lease payments during the
lease term. The lease liability is initially measured at the
present value of the remaining lease payments, discounted using the
rates based on the Group's incremental borrowing rate. The weighted
average discount rate used to discount the lease liability as at 26
March 2020 was 2.8%. The element of the liability payable in the
next 12 months is shown within current liabilities, with the
balance shown in non-current liabilities.
(v) Working capital
Under IAS 17, balances relating to lease incentives, rent
prepayments, accruals, onerous leases and similar balances were
held within other receivables, other payables and provisions. Under
IFRS 16 these balances are reflected in either the right-of-use
asset or the lease liability. On transition to IFRS 16, the Group
has elected to apply the relief option which allows it to adjust
the right-of-use asset by the amount of any provisions for onerous
leases. At 29 March 2019, GBP2.7m of the onerous lease provision
has been offset against the opening right-of-use asset. The Group
has used the C10(b) practical expedient for onerous leases.
The following table details the reconciliation between the
operating lease obligations as at 28 March 2019 and the opening
lease liability balance at 29 March 2019:
Maturity analysis - contractual undiscounted cash flows
Land and buildings Other Total
GBPm GBPm GBPm
Operating lease obligations as at 28 March
2019 571.9 9.9 581.8
Working capital movements (9.0) - (9.0)
Relief option for leases of low value - - -
Other - 0.7 0.7
Gross lease liabilities at 29 March 2019 562.9 10.6 573.5
Discounting (66.7) (0.7) (67.4)
Total lease liabilities at 29 March 2019 496.2 9.9 506.1
The working capital movements of GBP9.0m relate to the lease prepayments
on the balance sheet as at 28 March 2019 which were not reflected in
the operating lease disclosure made at 28 March 2019. Under IFRS 16,
this prepayment amount has been included in the right-of-use asset but
not the lease liability as the amounts have already been paid.
Glossary - Alternative Performance Measures
Guidelines on Alternative Performance Measures (APMs) issued by
the European Securities and Markets Authority came into effect for
all communications released on or after 3 July 2016 for issuers of
securities on a regulated market.
In the reporting of financial information, the Directors have
adopted various APMs of historical or future financial performance,
position or cash flows other than those defined or specified under
International Financial Reporting Standards (IFRS).
The Directors measure the performance of the Group based on the
following financial measures which are not recognised under
EU-adopted IFRS, and consider these to be important measures in
evaluating the Group's strategic and financial performance. The
Directors believe that these APMs assist in providing additional
useful information on the underlying trends, performance and
position of the Group.
APMs are also used to enhance the comparability of information
between reporting periods by adjusting for non-underlying items, to
aid the user in understanding the Group's performance.
Consequently, APMs are used by the Directors and management for
performance analysis, planning, reporting and incentive setting
purposes and have remained consistent with the prior year.
All APMs relate to the current period's results and comparative
periods where provided. Due to the Group adopting the modified
retrospective approach to IFRS 16, all prior year numbers have not
been restated. Where the current APM has been amended to exclude
the impact of transition to IFRS 16, this has been set out in the
definition below.
The key APMs used by the Group are:
'Like for Like' sales growth comprises total revenue in a
financial period compared to revenue achieved in a prior period for
stores, online operations, grooming salons, veterinary practices
and specialist referral centres that have been trading for 52 weeks
or more, excluding fee income from Joint Venture veterinary
practices where the Group has bought out the Joint Venture Partners
or will offer to buy out the Joint Venture Partners in the
future
Omni-channel revenue: Revenue net of discounts and VAT from core
online sales, subscriptions and order to store
Underlying EBITDA: Earnings before interest, tax, depreciation
and amortisation before the effect of non-underlying items in the
period
Underlying free cash flow: Net cash from operating activities,
after tax, less net cash used in investing activities (excluding
acquisitions), less interest paid and debt issue costs before the
effect of non-underlying items in the period
Underlying CROIC: Cash return on invested capital, represents
cash returns divided by the average of gross capital invested (GCI)
for the last 12 months. Cash returns represent underlying operating
profit before property rentals and share based payments subject to
tax, then adjusted for depreciation and amortisation. GCI
represents gross property, plant and equipment, plus software and
other intangibles excluding the goodwill created on the acquisition
of the Group by KKR (GBP906,445,000) plus net working capital, plus
capitalised rent multiplied by a factor of 8x, before the effect of
non-underlying items in the period
Non-underlying items: Certain costs or incomes that derive from
events or transactions that fall outside the normal activities of
the Group, and are excluded by virtue of their size and nature in
order to reflect management's view of the performance of the
Group
References to Underlying GAAP measures and Underlying APMs
throughout the financial statements are measured before the effect
of non-underlying items.
APM Definition Reconciliation
Cash EBITDA Underlying EBITDA (see Cash EBITDA (GBPm) FY19 FY20 Note
below) adjusted for IFRS Underlying EBITDA 130.0 220.7 2
16 transactions and share Effect of IFRS 16
based payment charges. on EBITDA - (79.1)
EBITDA before IFRS
16 130.0 141.6
Share based payment
charge 3.5 4.2 3
Cash EBITDA 133.5 145.8
Underlying Earnings before interest, Underlying EBITDA
EBITDA tax, depreciation and (GBPm) FY19 FY20 Note
amortisation Statutory operating
before the effect of profit 53.1 103.7 2
non-underlying Depreciation on tangible
items in the period. fixed assets 28.5 28.3 3
Amortisation of intangible
assets 8.3 10.0 3
Non-underlying items 40.1 7.6 3
Underlying EBITDA
before IFRS 16 130.0 149.6
Depreciation on right-of-use
assets - 71.1 3
Underlying EBITDA 130.0 220.7
Underlying Cash return on invested CROIC FY19 FY20 Note
CROIC capital, represents cash Cash returns:
returns divided by the Underlying operating
average of gross capital profit (pre IFRS 16) 93.2 103.3 29
(GCI) invested for the Property rental costs 77.0 76.1
last 12 months. Cash Share based payment
returns charges 3.5 4.2 3
represent underlying 173.7 183.6
operating Effective tax rate 21% 20%
profit before property Tax charge on above (37.0) (36.7)
rentals and share based 136.7 146.9
payments subject to tax, Depreciation and amortisation 36.8 38.3 3
then adjusted for Cash returns 173.5 185.2
depreciation
and amortisation. GCI Gross capital invested
represents (GCI):
gross property, plant and Gross property, plant
equipment, plus software and equipment 284.8 306.2 11
and other intangibles Intangibles 1,030.5 1,046.3 13
excluding Less KKR goodwill (906.5) (906.5)
the goodwill created on Investments 13.8 14.8 16
the acquisition of the Net working capital
Group by KKR (pre IFRS 16) (103.7) (125.2) see definition
(GBP906,445,000) Capitalised operating
plus net working capital, leases 615.8 608.8 8x
plus capitalised rent GCI 934.7 944.4
multiplied Average 919.1 939.6
by a factor of 8x. CROIC Underlying CROIC 18.9% 19.7%
is stated before the impact
of IFRS16 as it is based
on a 12 month rolling
average.
Underlying Net cash from operating Underlying free cash
free activities, after tax, flow (GBPm) FY19 FY20 Note
cash flow less net cash used in Underlying free cash
investing flow 63.6 89.6
activities (excluding Non-underlying working
acquisitions), capital (27.7) 1.2
less interest paid and Free cash flow 35.9 90.8
debt issue costs before Underlying cash flow
the effect of Dividends (37.2) (37.1) CFS
non-underlying Investments - (1.0) CFS
items in the period. Acquisition of subsidiary (1.1) (0.5) CFS
Repayment of borrowings
on acquisition (0.7) - CFS
Proceeds from new
loan 181.0 61.0 CFS
Repayment of borrowings (195.0) (77.0) CFS
Non-underlying cash
flow
Proceeds from sale
of PPE - 0.4 CFS
Proceeds from sale
of PPE relating to
GVs - (0.3)
Payment of deferred
consideration (1.0) - CFS
Settlement of put
& call (0.1) (6.4) CFS
Acquisition of subsidiary (2.4) (3.7) CFS
Costs associated with
acquisitions (0.7) (0.5) CFS
Repayment of borrowings
on acquisition (5.7) (5.9) CFS
Non-underlying working
capital 27.7 (1.2) CFS
Net increase/(decrease)
in cash 0.7 18.6
CFS = Consolidated
statement of cash
flows
Like-for-like 'Like-for-like' sales Not applicable.
growth
comprises total revenue
in a financial period
compared
to revenue achieved in
a prior period for stores,
online operations, grooming
salons, veterinary
practices
and specialist referral
centres that have been
trading for 52 weeks or
more, excluding fee income
from Joint Venture
veterinary
practices where the Group
has bought out the Joint
Venture Partners or will
offer to buy out the Joint
Venture Partners in the
future.
2-year like-for-like 2-year like-for-like sales Not applicable.
growth comprises total
revenue in a financial
period compared to revenue
achieved in the financial
period before the prior
period for stores, online
operations, and grooming
salons that have been
trading
for 104 weeks or more.
Underlying Underlying basic earnings Underlying basic EPS
basic EPS per share (EPS) is based (p) FY19 FY20 Note
on earnings per share after Underlying basic EPS 14.1 15.0 5
the impact of IFRS 16, Non-underlying items (8.0) (1.5) 5
but before the impact of Basic earnings per
certain costs or incomes share 6.1 13.5
that derive from events
or transactions that fall
outside the normal
activities
of the Group, and are
excluded
by virtue of their size
and nature in order to
reflect management's view
of the performance of the
Group.
Underlying Underlying operating profit Underlying operating
operating is based on operating profit (GBPm) FY19 FY20 Note
profit profit Underlying operating
before the impact of profit 93.2 111.3 2
certain Non-underlying items (40.1) (7.6) 3
costs or incomes that Operating profit 53.1 103.7
derive
from events or transactions
that fall outside the
normal
activities of the Group,
and are excluded by virtue
of their size and nature
in order to reflect
management's
view of the performance
of the Group.
Underlying Underlying profit before Underlying PBT (GBPm) FY19 FY20 Note
profit before tax (PBT) is based on Underlying PBT 89.7 93.5 CIS
tax pre-tax Non-underlying items (40.1) (7.6) 3
profit before the impact PBT 49.6 85.9
of certain costs or incomes CIS = Consolidated income statement
that derive from events
or transactions that fall
outside the normal
activities
of the Group, and are
excluded
by virtue of their size
and nature in order to
reflect management's view
of the performance of the
Group.
Underlying Underlying profit after Underlying PAT (GBPm) FY19 FY20 Note
profit after tax (PAT) is based on post Underlying PAT 70.4 74.9 CIS
tax tax profit before the Non-underlying items (39.9) (7.5) CIS
impact PAT 30.5 67.4
of certain costs or incomes CIS = Consolidated income statement
that derive from events
or transactions that fall
outside the normal
activities
of the Group, and are
excluded
by virtue of their size
and nature in order to
reflect management's view
of the performance of the
Group.
Underlying Underlying total tax Underlying total tax
total tax expense expense (GBPm) FY19 FY20 Note
expense is based on the statutory Underlying tax expense (19.3) (18.6) 8
tax expense for the period Non-underlying items 0.2 0.1 8
(being the net of current Tax expense (19.1) (18.5)
and deferred tax) before
the impact of certain costs
of incomes that derive
from events or transactions
that fall outside the
normal
activities of the Group,
and are excluded by virtue
of their size and nature
in order to reflect
management's
view of the performance
of the Group.
Underlying Net working capital Underlying net working
net working movement capital movement (GBPm) FY19 FY20 Note
capital is a measure of the cash Net working capital
required by the business per cash flow statement 5.4 27.3 CFS
to fund its inventory, Being:
receivables and payables. Movement in trade
The change year on year and other receivables 10.7 8.8 CFS
reflects the cash Movement in inventories (7.3) 5.7 CFS
in/outflow Movement in trade
in relation to changes and other payables 12.6 16.9 CFS
in the working capital Movement in provisions 1.9 (0.7) CFS
cycle excluding Trading working capital
non-underlying movement 17.9 30.7
items. Movement in gross
The change in net working operating loans (9.6) (2.5) CFS
capital is a key component Cash working capital
of the free cash flow movement 8.3 28.2
measure Underlying allowance
of the Group. for expected credit
losses against operating
loans (2.9) (0.9) CFS
Net working capital
movement 5.4 27.3
CFS = Consolidated
statement of cash
flows
(GBPm) FY19 FY20 Note
Receivables 68.9 55.9 17
Inventory 68.2 62.8 14
Trade and other payables (223.7) (204.6)
Provisions (15.4) (3.9) 21
Non-current provisions (1.7) (1.3) 21
Net working capital (103.7) (91.1)
Underlying Working capital before Underlying cash working
cash working increase/decrease in gross capital (GBPm) FY19 FY20 Note
capital operating loans to Joint Net working capital
Venture practices (above) 5.4 27.3
Net loans and borrowings (1.8) 1.6 27
Underlying cash working
capital 3.6 28.9
Operating Net cash flow from Operating free cash
cash flow operating flow(GBPm) FY19 FY20 Note
activities per the cash Net cash flow from
flow statement, before operating activities
the effects of corporation (per cash flow statement) 107.8 215.2 CFS
tax payments, Add back:
non-underlying Tax paid 18.6 30.8 CFS
elements, and IFRS16 Settlement of put
& call liabilities
(growth element) 0.1 0.8 CFS
Pre-tax underlying
operating cash flow 126.5 246.8
Capital lease payments - (67.0) CFS
Interest paid on lease
obligations - (14.0) CFS
Operating cash flow 126.5 165.8
Tax paid (18.6) (30.8) CFS
Interest paid (3.4) (3.7) CFS
Interest received 0.6 0.5 CFS
Debt issue costs (2.5) - CFS
Purchase of own shares (1.8) (2.8) CFS
Acquisition of PPE
and intangible assets (37.4) (39.6) CFS
Proceeds from sale
of PPE 0.6 0.4 CFS
Proceeds from sale
of PPE (non-underlying) (0.4) (0.2) CFS
Underlying free cash
flow 63.6 89.6
CFS = Consolidated
statement of cash
flows
Omni-channel Revenue net of discounts Omni-channel revenue
revenue and VAT from core online (GBPm) FY19 FY20 Note
sales, subscriptions and Omni-channel revenue 73.5 93.9
order to store.
Underlying Earnings before interest Underlying EBIT (GBPm) FY19 FY20 Note
EBIT and tax agreed to operating Operating profit relating
profit relating to to underlying trading
underlying (EBIT) 93.2 111.3 2
trading.
Retail underlying Earnings before interest Retail Underlying
EBIT and tax agreed to operating EBIT (GBPm) FY19 FY20 Note
profit relating to Retail operating profit
underlying relating to underlying
trading for the Retail trading (EBIT) 67.2 89.3 2
division.
Vet Group Earnings before interest Vet Group Underlying
underlying and tax agreed to operating EBIT (GBPm) FY19 FY20 Note
EBIT profit relating to Vet Group operating
underlying profit relating to
trading for the Vet Group underlying trading
division. (EBIT) 32.1 30.6 2
Net debt Cash and cash equivalents Net debt (GBPm) FY19 FY20 Note
less loans and borrowings. Cash and cash equivalents 60.5 79.1 18
Loans and borrowings (181.0) (165.0) 19
Net debt (120.5) (85.9)
Customer Customer sales being Customer sales (GBPm) FY19 FY20 Note
sales statutory Statutory Group revenue 961.0 1,058.8 CIS
Group revenue, less Joint Fee income (52.6) (53.8) 2
Venture veterinary practice Sales by Joint Venture
fee income (which forms veterinary practices 309.8 329.7
part of statutory revenue Customer sales 1,218.2 1,334.7
within the Vet Group), IS = Consolidated income
plus gross customer sales statement
made by Joint Venture
veterinary
practices (unaudited).
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
FR FFFEIEEIIFII
(END) Dow Jones Newswires
May 21, 2020 02:00 ET (06:00 GMT)
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