TIDMPVG
RNS Number : 1411R
Premier Veterinary Group PLC
26 June 2020
PREMIER VETERINARY GROUP PLC
("PVG", the "Company" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHSED 31 MARCH 2020
London, UK, 26 June 2020 - Premier Veterinary Group plc today
announces its unaudited interim results for the six months ended 31
March 2020.
HIGHLIGHTS
-- 22% increase in total number of pets on fee-generating pet
care plans under PVG's preventative healthcare programme for pets
branded "Premier Pet Care Plan" ("PPCP") to 336,000 (31 March 2019:
275,000).
2020 2019 Change
000's 000's
----- ----- ------
United Kingdom 261 214 +22%
----- ----- ------
Europe 53 47 +13%
----- ----- ------
US 22 14 +57%
----- ----- ------
Total 336 275 +22%
----- ----- ------
-- 5% increase in total revenue
Six months ended 31 March 2020 2019 Change
UK GBP1,016k GBP1,048k -3%
----------- ----------- -------
Europe GBP452k GBP468k -3%
----------- ----------- -------
US GBP498k GBP351K +42%
----------- ----------- -------
Total revenue GBP1,966k GBP1,867k +5%
----------- ----------- -------
-- Loss before interest and tax to 31 March 2020 GBP0.84m (31 March 2019: GBP1.39m).
-- Cash and short-term deposits of GBP0.46m as at 31 March 2020 (at 31 March 2019: GBP1.68m).
-- Cash outflow from operating activities for six months to 31
March 2020 of GBP0.6m (six months ended 31 March 2019:
GBP1.50m).
Post period events
-- COVID-19. As previously reported, in view of the global
uncertainties PVG considered the assistance available from
government agencies in the UK, US and France and accessed that
assistance where appropriate including the furloughing of a small
number of employees. PVG's remaining employees including the
directors agreed to a Group wide reduction in salaries from April
to June and other short-term cost savings have been
implemented.
-- Revenue for the month of May 2020 was in line with that of
February 2020 and the current number of pets on plan is slightly
ahead of the high point seen during March 2020.
-- UK Home Delivery offering has seen encouraging growth since
the UK lockdown and we are investigating options to make this
service more widely available.
-- Extension of January 2020 loan repayment date to 31 July 2021
-- During June PVG agreed a new US collaboration agreement with
MWI Animal Health part of AmerisourceBergen and a leading
distributor of animal health products to co-promote Premier Pet
Care Plan nationally.
Dominic Tonner, CEO of PVG commented:
"Over the first six months of the financial year PVG continued
to see solid progress in the number of pets on plan across the
Group and these numbers have been maintained despite the effects of
the COVID 19 pandemic. The investment in our technology platform
has enabled us to deliver improved operational performance and we
continue to look for opportunities to grow and expand the business.
We have been pleased with the resilience of the business during the
COVID-19 pandemic and our Home Delivery offering in the UK has been
particularly well received. We anticipate continued growth in the
US flowing from our work with MWI. Subject to a global recovery
post-COVID the business is well placed to continue its growth and
drive to profitability."
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014.
For further information, please contact:
Premier Veterinary Group plc www.premiervetgroup.co.uk
Dominic Tonner, Chief Executive
Officer +44 (0)117 970 4130
Andy Paull, Chief Financial
Officer
WH Ireland Limited (Broker) www.whirelandplc.com
Mike Coe / Chris Savidge +44 (0) 207 220 1666
INTERIM MANAGEMENT REPORT
To the members of Premier Veterinary Group plc
Cautionary statement
This Interim Management Report ("IMR") has been prepared solely
to provide additional information to shareholders to assess the
Group's strategies and the potential for those strategies to
succeed. The IMR should not be relied on by any other party or for
any other purpose.
The IMR contains certain forward-looking statements. These
statements are made by the Directors in good faith based on the
information available to them up to the time of their approval of
this report, but such statements should be treated with caution due
to the inherent uncertainties, including both economic and business
risk factors, underlying such forward-looking information.
This interim management report has been prepared for the Group
as a whole and, therefore, gives greater emphasis to those matters
which are significant to Premier Veterinary Group plc and its
subsidiary undertakings when viewed as a whole.
Introduction
Premier Veterinary Group plc provides its services to third
party veterinary practices through its wholly-owned subsidiary,
Premier Vet Alliance Limited ("PVA"). The Company also operates a
number of wholly-owned overseas subsidiaries to market its services
in the respective country.
The principal activity of the Group is the development,
administration and support of a preventative healthcare programme
for pets branded "Premier Pet Care Plan" ("PPCP"). PPCP is a
structured, monthly payment preventative healthcare programme for
cats, dogs and rabbits covering many of the fixed cost
non-insurable items to help maintain the health and wellbeing of a
pet. The programme facilitates gold standard care for pets at an
affordable price for the pet owner, by way of fixed monthly
payments.
Overview and strategic update
As stated in the Annual Report and Accounts for the year ended
30 September 2019 (the "2019 Annual Report"), the Group's
objectives are to:
-- leverage the success of the PVA business;
-- develop the business through its global strategic partnerships and growing data set;
-- continue to invest in PVA's global transaction platform; and,
-- develop new opportunities for growth.
In the first half of the financial year, the Group has continued
to pursue its strategy of targeted geographical expansion in order
to maximise the Group's growth potential and profitability. Over
the last six months, the Group has consolidated its PPCP businesses
and the management team continues to explore opportunities to
accelerate growth. The Group has delivered significant cost
reductions and targeted changes to its operational models to
improve profitability.
We continue to invest in our IT platform to ensure the business
delivers enhanced levels of customer support and experience in an
efficient way.
Regional review
UK
In the UK, the number of pets on plan has increased by 22% to
261,000 as at 31 March 2020 (31 March 2019: 214,000). Market
consolidation driven by corporate acquisition continues to provide
challenge to improve and diversify services and the opportunity to
win substantial contracts. Our Home Delivery service offering which
was released to the market in April 2018 has proven strategically
important during the Government lock-down announced on 23 March
2020 and has seen significant growth.
Europe
The number of pets on plan in Europe has increased by 13% to
53,000 (31 March 2019: 47,000).
The Group's most significant territory in Europe is the
Netherlands. We revised our service offering to the Dutch market
during Q4 of the previous financial year and now manage the
territory from the UK, this has resulted in significant
efficiencies enabling the territory to deliver a profit during the
first half year. We anticipate this profitability to be maintained
during the second half year ending 30 September 2020. The number of
pets on plan has decreased by 3% to 35,000 as at 31 March 2020 (31
March 2019: 36,000).
In France, at 31 March 2020, there were 16,000 pets on plan (31
March 2019: 10,000). Revenue grew by 8% year on year for the first
half of this financial year with a 24% reduction in operating
expense.
US
The number of pets on plan has increased to 22,000 (31 March
2019: 14,000). The investment made in the US territory and the
platform established by our operating model have enabled us to
continue to realise encouraging growth.
The net growth in pets on plan, being new pets signed up less
pets cancelled, has continued to improve following technological
and service enhancements implemented during 2019.
We are continuing to explore opportunities with other corporate
groups to enable the Group to capitalise on the performance we have
seen to date.
Financial and non-financial key performance indicators
("KPIs")
As set out in the 2019 Annual Report, the Group monitors its
performance in implementing the Group's strategy with reference to
four KPIs. The KPIs are applied on a Group-wide basis. Performance
against those KPIs in the six months ended 31 March 2020 was as
follows:
Sales volume and revenue growth
A key element underpinning the Group's strategy is to deliver
sales volume growth and revenue growth from PPCP. Sales volume
growth is measured by the number of active pets who are members of
a PPCP.
PPCP fees are generated from the number of pets who are members
of a PPCP each month and are recognised on a receipts basis. A flat
fee is received for every active pet.
The Group's revenues for the continuing business for the six
months ended 31 March 2020 increased by 5% to GBP1.966m (31 March
2019: GBP1.87m).
The total number of transactions processed increased to
2,001,000 over the six-month period to 31 March 2020 (31 March
2019: 1,601,000), an increase of 25%.
Pets on Plan
The number of pets on plan is the key revenue driver. This KPI
enables management to ensure clinics are achieving the levels of
penetration that are expected and to focus attention on those that
are underperforming.
The number of fee generating pets on plan represents those pets
on plan where a fee has been generated for the Group in that month,
i.e. a direct debit (or equivalent) has been processed for that
pet. Due to the time required by banking protocols to set up these
transactions, there will be joiners and leavers in a month who are
not included in this measure as they have not yet been processed by
(or removed from) the system.
The following table shows the quarterly growth in the number of
pets on plan over the last 12 months.
As at As at As at As at As at
Mar-19 Jun-19 Sept-19 Dec-19 Mar-20
000's 000's 000's 000's 000's
------- ------- -------- ------- -------
United Kingdom 214 226 240 251 261
------- ------- -------- ------- -------
Europe 47 50 52 53 53
------- ------- -------- ------- -------
US 14 17 19 21 22
------- ------- -------- ------- -------
Total no of fee generating
pets on plan 275 293 311 325 336
------- ------- -------- ------- -------
Overall, the number of pets administered by PPCP has increased
by 22% to 336,000 as at 31 March 2020 (31 March 2019: 275,000). In
the UK, the number of pets on plan has increased by 22% to 261,000
as at 31 March 2020 (31 March 2019: 214,000). The number of pets on
plan in Europe has increased by 13% to 53,000 (31 March 2019:
47,000).
In the US the number of pets on plan has increased by 57% to
22,000 (31 March 2019: 14,000).
Cash processed through the platform
Whilst the number of pets on plan is an internal point of
reference for the Group. By monitoring cash (inclusive of sales
tax) processed through the platform management is able to monitor
the benefit to partners of the Group's member clinics operating
PPCPs. The table below shows the value of transactions processed in
the six months to 31 March 2020 compared to the same period last
year.
Value of transactions processed 31 March 31 March
in 6 months ended 2020 2019 % growth
GBP000s GBP000s
--------- --------- ---------
UK 22,912 18,164 26%
--------- --------- ---------
Europe 4,790 4,046 18%
--------- --------- ---------
US 4,156 2,014 106%
--------- --------- ---------
Total 31,858 24,224 31%
--------- --------- ---------
Results for the six months ended 31 March 2020
The Group's total continuing revenues increased by 5% to
GBP1.97m for the six months ended 31 March 2020 (GBP1.87m six
months ended 31 March 2019). The operating loss for the six months
ended 31 March 2020 was GBP1.19m (31 March 2019: GBP1.57m).
The table below shows the performance of the continuing business
of the UK and overseas:
Revenue Operating profit/(loss)
GBP000's GBP000's
-------------- --------------------------
Six months ended 2020 2019 2020 2019
------ ------ ------------ ------------
UK 1,016 1,048 64 183
------ ------ ------------ ------------
Europe 452 468 (59) (354)
------ ------ ------------ ------------
US 498 351 (229) (487)
------ ------ ------------ ------------
Total 1,966 1,867 (224) (658)
------ ------ ------------ ------------
Central unallocated costs (619) (732)
------ ------ ------------ ------------
Loss before interest and
tax (843) (1,390)
------ ------ ------------ ------------
Interest (345) (185)
------ ------ ------------ ------------
Loss from operations (1,188) (1,575)
------ ------ ------------ ------------
The UK business has seen a 3% reduction in revenue. Whilst the
number of fee generating pets on plan grew by 22% there was a
reduction in the average fee per pet which, with operating costs
being higher than the same period last year, has impacted operating
profit.
In Europe, the changes to our support model in the Netherlands
resulted in a significant reduction in operating costs whilst
French costs also reduced. Revenue declined by only 3% to deliver
improved profitability and we anticipate the Europe territory to
deliver a profitable return this financial year
US operating costs have reduced by a further GBP0.1m in the
first half of the year despite supporting the continuing roll out
of the PVCC clinic contract and delivering 42% growth in revenue.
The operating cost reduction coupled with GBP0.15m increase in
revenues has reduced the operating loss in the territory further
from GBP0.49m to GBP0.22m.
At 31 March 2020, the staff headcount was 40 (31 March 2019:
50).
Headcount 31 March 31 March 30 September
as at 2020 2019 2019
No No No
UK 28 33 34
Europe 4 10 7
USA 8 7 7
--------- -------------
40 50 48
--------- --------- -------------
Central unallocated costs have decreased by 15% compared to the
same period in the prior year.
The share-based compensation charge for both periods was
GBPNil.
Interest charges were GBP345k (2019: GBP185k) and relate solely
to interest and amortised arrangement fee on the unsecured loan
facility that was entered into in January 2019 and the additional
facility entered into in January 2020.
Dividends and dividend policy
It is, at present, intended that no dividends will be paid by
the Group. The position will be reviewed if future operations lead
to significant levels of distributable profits, having taken into
account any cash that needs to be reinvested in the Group's
business.
Financial position
Total assets less current liabilities were GBP0.119m as at 31
March 2020 (31 March 2019: GBP2.165).
Net liabilities were GBP4.4m at 31 March 2020 including long
term financing of GBP4.45m (31 March 2019: net liabilities
GBP1.79m).
Cash and short-term deposits were GBP0.46m as at 31 March 2020
(at 31 March 2019: GBP1.68m).
Cash flow
Net cash outflow from continuing operating activities for the
six months ended 31 March 2020 was GBP0.6m (six months ended 31
March 2019: GBP1.50m).
Post-retirement benefits
The PVG Group operates defined contribution pension schemes and
the pension charge represents the amounts payable by the PVG Group
to the fund and into personal arrangements in respect of the
period.
Related party transactions
Related party transactions are disclosed in note 7 to the
condensed set of financial statements.
Risk and uncertainties
The principal risks and uncertainties affecting the business
activities of the Group were identified under the heading "Risk
management and principal and financial risks" in the Strategic
Report on pages 11 to 14 of the 2019 Annual Report, a copy of which
is available on the Company's website www.premiervetgroup.co.uk
.
These comprise:
-- Market competition
-- Consumer spending and preferences
-- Financial liquidity risk
-- Brand reputation
-- New initiatives and failure to expand the pet healthcare services
-- Management of growth and expansion
-- International expansion risk
-- PVA's status as a Direct Debit originator being revoked
-- Direct Debit rule changes by BACS
-- Attraction and retention of key employees
-- Information security and data protection
-- Continuity of operations
-- Litigation and consequent impact on reputation
In addition to those risks previously identified, the impact of
and the uncertainty created by the global COVID-19 pandemic is an
additional risk factor.
Going concern
As stated in note 2 to the condensed financial statements, The
Group made a loss from continuing operations for the period of
GBP1.2m (six months ended 31 March 2019: GBP1.6m) and had net
liabilities of GBP4.4m (31 March 2019: net liabilities of GBP1.8m).
The Group had cash balances of GBP0.5m (2019: GBP1.7m).
The Group's operations have largely been financed by loans from
Bybrook Finance Solutions Limited (BFSL), a company of which the
sole shareholder and director is Rajan Uppal who is a director of
PVG.
On 29 January 2020 the Group announced that an agreement had
been reached whereby BFSL has agreed to the roll up of monthly
interest payments and the extension of the repayment date of the
GBP3.85m facility and accrued interest to 31 July 2021.
In addition, PVG entered into a further agreement with BFSL to
provide an additional secured loan facility of GBP1.1m. The first
tranche of GBP0.6m was drawn on 29 January 2020 with two further
tranches of GBP0.25m each available for draw down at PVG's request
on 22 May 2020 and 24 July 2020. These further tranches could only
be drawn by PVG if on or before 30 April 2020 it had issued BFSL
with warrants to subscribe for up to 383,673 new PVG ordinary
shares of 10p each at an exercise price of 10p per share within 5
years of the issue of any such warrants. Interest of 1% per month
accrues on the loan facility on a monthly compound basis and is
added to the total loan amount. The total loan together with
accrued interest would have been repayable on 30 April 2020 with an
option for PVG to extend the repayment date to 31 July 2021 by
issuing the warrants referred to above.
As a result of the occurrence of the Coronavirus (Covid-19)
pandemic and the imposition of a lock down by the UK Government
PVG's Annual General Meeting due to take place on 31 March 2020 was
postponed and the Warrants could not be issued because PVG did not
have a valid authority to issue shares. Accordingly, the repayment
date was not extended and BFSL no longer has an obligation to make
any further advances to PVG under the 2020 Facility.
On 1 May 2020 PVG and BFSL entered into further deeds of
amendment that provide for (i) the waiver of events of default that
have occurred under the 2019 Facility and the 2020 Facility as a
result of actions taken by PVG in light of the Coronavirus
(Covid-19) pandemic and (ii) the extension of the repayment date in
the 2020 facility to 31 July 2021.
As a result, there are no further loan tranches due and the
total amount due to BFSL under the 2019 and 2020 facilities,
totalling GBP4.45m plus accrued interest will fall due on 31 July
2021.
The directors consider that with its current cash reserves, the
Group has sufficient resources after running various sensitivity
analyses including ones with moderate growth and the implementation
of further cost savings initiatives, to meet all current
liabilities as they fall due. After consideration of market
conditions, the Group's financial position, the Group's forecasts
and projections, which allow for reasonable possible changes in
trading performance and after making enquiries, the directors have
a reasonable expectation that the Group and the Company have
adequate resources to continue in operational existence for the
foreseeable future.
Outlook
Continued growth in the number of pets on plan is dependent on
lockdowns being lifted and not reinstated in the territories in
which PVG operates. Our growth in pets on plan numbers has been
halted over the last 3 months but PVG is well placed to continue
its growth trajectory as lock down measures ease.
The UK and Netherlands businesses are profitable on current
revenue levels and our business in France is expected to become
profitable on a monthly basis early next financial year as a result
of cost reduction relating to a change in our business model.
The US business is dependent on an increase in pets on plan
numbers to achieve profitability.
We will continue to strengthen our IT platform which has enabled
us to continue to efficiently and effectively deliver our ongoing
expansion strategy.
RESPONSIBILITY STATEMENT
For the six months ended 31 March 2020, we confirm to the best
of our knowledge that:
(a) the condensed set of financial statements has been prepared
in accordance with IAS 34 'Interim Financial Reporting';
(b) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
(c) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related party
transactions that have taken place in the first six months of the
current financial year and that have materially affected the
financial position or performance of the entity during that period;
and any changes in the related party transactions described in the
last Annual Report that have done so).
By order of the Board,
Dominic Tonner Andy Paull
Chief Executive Officer Chief Financial Officer
26 June 2020 26 June 2020
Registered office Registered number
New Bond House 04313987
Bond Street
Bristol
BS2 9AG
Condensed consolidated statement of comprehensive income
For the six months ended 31 March 2020 (unaudited)
6 months 6 months
ended ended
31 March 31 March
Note 2020 2019
GBP'000 GBP'000
Continuing operations Total Total
Revenue 1,966 1,867
Cost of sales (200) (125)
Gross profit 1,766 1,742
Other administrative expenses (2,609) (3,132)
Loss from operations (843) (1,390)
Finance expense (345) (185)
Loss before income tax (1,188) (1,575)
Income tax - -
Loss for the period (1,188) (1,575)
Exchange differences on translation
of foreign operations 26 40
Loss and total comprehensive expense
for the period attributable to equity
holders of the parent company (1,162) (1,535)
---------------------------------------- ----- ---------- ----------
Loss per share for loss attributable
to the owners of the parent during
the period 3
Basic (pence) (7.6) (10.0)
Diluted (pence) (7.4) (9.7)
Condensed consolidated statement of financial position
As at 31 March 2020 (unaudited)
As at As at As at
31 March 31 March 30 September
Note 2020 2019 2019
GBP'000 GBP'000 GBP'000
Non-current assets
Property, plant and equipment 38 26 23
Intangible assets 409 551 474
Total non-current assets 447 577 497
Current assets
Trade and other receivables 474 825 569
Cash and cash equivalents 459 1,677 686
---------- ---------- --------------
Total current assets 933 2,502 1,255
Total assets 1,380 3,079 1,752
========== ========== ==============
Equity attributable to equity holders of the Company
Called up share capital 5 1,535 1,535 1,535
Share premium 5 5 5
Share based payments reserve 35 35 35
Reverse acquisition reserves 3,671 3,671 3,671
Retained earnings (9,647) (7,035) (8,485)
Total equity (4,401) (1,789) (3,239)
Current liabilities
Trade and other payables 1,128 782 938
Current tax liabilities 133 132 133
Total current liabilities 1,261 914 1,071
Non-current liabilities
Loans and borrowings 4,450 3,850 3,850
Deferred tax provision 70 104 70
---------- ---------- --------------
Total non-current liabilities 4,520 3,954 3,920
Total liabilities 5,781 4,868 4,991
Total equity and liabilities 1,380 3,079 1,752
========== ========== ==============
Condensed consolidated statement of changes in equity
For the six months ended 31 March 2020 (unaudited)
Share
based Reverse
Share Share payments acquisition Retained
capital premium reserve reserve earnings Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as
at 1 October
2018 1,535 5 35 3,671 (5,500) (254)
Loss and total
comprehensive
expense for
the period: - - - - (1,535) (1,535)
Balance as
at 31 March
2019 1,535 5 35 3,671 (7,035) (1,789)
Loss and total
comprehensive
expense for
the period: - - - - (1,450) (1,450)
Balance as
at 1 October
2019 1,535 5 35 3,671 (8,485) (3,239)
----------------- ----------- --------- ---------- ------------- ---------- --------
Loss and total
comprehensive
expense for
the period: - - - - (1,162) (1,162)
Balance as
at 31 March
2020 1,535 5 35 3,671 (9,647) (4,401)
----------------- ----------- --------- ---------- ------------- ---------- --------
Condensed consolidated statement of cash flows
For the six months ended 31 March 2020 (unaudited)
6 months 6 months
ended ended
31 March 31 March
2020 2019
GBP '000 GBP '000
Cash flows from:
Operating activities
Loss before income tax (1,188) (1,575)
Finance expense 345 185
Differences on translation of operations
in foreign currencies 26 40
Depreciation of property, plant and
equipment 7 16
Amortisation of intangible assets 90 90
(Increase)/decrease in trade and other
receivables (72) (291)
Increase/(decrease) in trade and other
payables 190 79
--------- ---------
Cash used in operations (602) (1,456)
Income taxes - -
--------- ---------
Net cash outflow from operating activities (602) (1,456)
Investing activities
Purchase of property, plant and equipment (22) (9)
Purchase of intangible assets (25) (171)
--------- ---------
Net cash used in investing activities (47) (180)
Loans received 600 2,850
Payment of loan arrangement fee (100) -
Interest paid (78) (185)
--------- ---------
Net cash generated from/(used in) financing
activities 422 2,665
Net increase/(decrease) in cash and
cash equivalents (227) 1,029
Cash and cash equivalents at beginning
of period 686 648
Cash and cash equivalents at end of
period 459 1,637
========= =========
Shown as:
Cash and cash equivalents 459 1,677
459 1,677
========= =========
Notes to the financial information
1 General information
This interim financial information was authorised for issue on
26 June 2020. The information for the period ended 31 March 2020
does not constitute statutory accounts as defined in section 434 of
the Companies Act 2006. They have been prepared in accordance with
IAS 34 Interim Financial Reporting. They do not include all of the
information required in annual financial statements in accordance
with IFRS.
2 Significant accounting policies
The financial statements have been prepared in accordance with
the recognition and measurement principles of International
Financial Reporting Standards (IFRS) as adopted by the European
Union.
The nancial statements have been prepared on the historical cost
basis. The principal accounting policies adopted are set out
below.
Basis of preparation
The half-year condensed consolidated financial statements for
the six months ended 31 March 2020 have been prepared in accordance
with the Disclosure and Transparency Rules (DTR) of the Financial
Services Authority and with IAS 34 'Interim Financial Reporting'.
The half-year condensed consolidated financial statements do not
include all the information and disclosures required in the annual
financial statements and should be read in conjunction with the
Group's annual financial statements as at 30 September 2019, which
have been prepared in accordance with IFRS as adopted by the
European Union.
This half-year condensed consolidated financial information does
not comprise statutory accounts within the meaning of Section 434
of the Companies Act 2006. Statutory accounts for the year ended 30
September 2019 were approved by the Board of Directors on 31
January 2020. These accounts, which contained an unqualified audit
report under Section 495 of the Companies Act 2006 and which did
not make any statements under Section 498 of the Companies Act
2006, have been delivered to the Registrar of Companies in
accordance with Section 441 of the Companies Act 2006.
There have been no significant changes to estimates of amounts
reported in prior financial years.
The accounting policies adopted in the preparation of the
half-year condensed consolidated financial statements are
consistent with those followed in the preparation of the Group's
annual financial statements for the year ended 30 September
2019.
Going concern
The Group made a loss from continuing operations for the period
of GBP1.2m (six months ended 31 March 2019: GBP1.6m) and had net
liabilities of GBP4.4m (31 March 2019: net liabilities of GBP1.8m).
The Group had cash balances of GBP0.5m (2019: GBP1.7m).
On 29 January 2020 the Group announced that an agreement had
been reached whereby BFSL has agreed to the roll up of monthly
interest payments and the extension of the repayment date of the
GBP3.85m facility and accrued interest to 31 July 2021.
In addition, PVG entered into a further agreement with BFSL to
provide an additional secured loan facility of GBP1.1m. The first
tranche of GBP0.6m was drawn on 29 January 2020 with two further
tranches of GBP0.25m each available for draw down at PVG's request
on 22 May 2020 and 24 July 2020. These further tranches could only
be drawn by PVG if on or before 30 April 2020 it had issued BFSL
with warrants to subscribe for up to 383,673 new PVG ordinary
shares of 10p each at an exercise price of 10p per share within 5
years of the issue of any such warrants. Interest of 1% per month
accrues on the loan facility on a monthly compound basis and is
added to the total loan amount. The total loan together with
accrued interest would have been repayable on 30 April 2020 with an
option for PVG to extend the repayment date to 31 July 2021 by
issuing the warrants referred to above.
As a result of the occurrence of the Coronavirus (Covid-19)
pandemic and the imposition of a lock down by the UK Government
PVG's Annual General Meeting due to take place on 31 March 2020 was
postponed and the Warrants could not be issued because PVG did not
have a valid authority to issue shares. Accordingly, the repayment
date was not extended and BFSL no longer has an obligation to make
any further advances to PVG under the 2020 Facility.
On 1 May 2020 PVG and BFSL entered into further deeds of
amendment that provide for (i) the waiver of events of default that
have occurred under the 2019 Facility and the 2020 Facility as a
result of actions taken by PVG in light of the Coronavirus
(Covid-19) pandemic and (ii) the extension of the repayment date in
the 2020 facility to 31 July 2021.
As a result, there ar no further loan tranches due and the total
amount due to BFSL under the 2019 and 2020 facilities, totalling
GBP4.45m plus accrued interest, will fall due on 31 July 2021.
The directors consider that with its current cash reserves the
Group has sufficient resources after running various sensitivity
analyses including ones with moderate growth and the implementation
of further cost savings initiatives, to meet all current
liabilities as they fall due. After consideration of market
conditions, the Group's financial position, the Group's forecasts
and projections, which allow for reasonable possible changes in
trading performance and after making enquiries, the directors have
a reasonable expectation that the Group and the Company have
adequate resources to continue in operational existence for the
foreseeable future.
Basis of consolidation
The condensed consolidated financial statements consolidate
those of the parent company and all of its subsidiaries as of 31
March 2020.
All transactions and balances between Group companies are
eliminated on consolidation, including unrealised gains and losses
on transactions between Group companies. Amounts reported in the
financial statements of subsidiaries have been adjusted where
necessary to ensure consistency with the accounting policies
adopted by the Group.
Profit or loss and other comprehensive income of subsidiaries
acquired or disposed of during the year are recognised from the
effective date of acquisition, or up to the effective date of
disposal, as applicable.
Revenue
Revenue for the Group is measured at the fair value of the
consideration received or receivable. The Group recognises revenue
for services provided when the amount of revenue can be reliably
measured and it is probable that future economic benefits will flow
to the entity. All intercompany revenues are eliminated on
consolidation.
The Group's primary income stream is generated from Premier Pet
Care Plan. Fees received for the collection and management of
monthly transactions on behalf of veterinary practices external to
the Group are recognised on a receipts basis. There are four
elements within this income stream:
-- Launch fees: Fee received from a new clinic upon launch of scheme.
-- Admin fees: Fee paid by pet owner upon introduction to scheme.
-- Transaction fees: Fee received for every transaction processed.
-- Other: Additional external support fees.
Expenditure
Expenditure is recognised in respect of goods and services
received when supplied in accordance with contractual terms.
Provision is made when an obligation exists for a future liability
relating to a past event and where the amount of the obligation can
be reliably estimated.
Financial assets
The Group classifies its financial assets into the categories
discussed below in accordance with the purpose for which the asset
was acquired.
Loans and receivables
These assets are non-derivative financial assets with fixed or
determinable payments that are not quoted in an active market. They
arise principally through the provision of services to customers
(e.g. trade receivables), but also incorporate other types of
contractual monetary asset. They are initially recognised at fair
value plus transactions costs that are directly attributable to
their acquisition or issue and are subsequently carried at
amortised cost using the effective interest rate method, less
provision for impairment.
The Group's loans and receivables comprise of trade and other
receivables included within the consolidated statement of financial
position.
Cash and cash equivalents include cash held at bank and bank
deposits available on demand.
Impairment provisions are recognised when there is objective
evidence (such as significant financial difficulties on the part of
the counterparty or default or significant delay in payment) that
the Group will be unable to collect all of the amounts due under
the terms receivable, the amount of such a provision being the
difference between the net carrying amount and the present value of
the future expected cash flows associated with the impaired
receivable. For trade receivables, which are reported net, such
provisions are recorded in a separate allowance account with the
loss being recognised within administrative expenses in the income
statement. On confirmation that the trade receivables will not be
collectable, the gross carrying value of the asset is written off
against the associated provision.
Financial liabilities
The Group classifies its financial liabilities as other
financial liabilities which include the following:
-- Bank overdrafts which are initially recognised at fair value
and subsequently carried at amortised cost using the effective
interest method.
-- Bank loans which are initially recognised at fair value net
of any transaction costs directly attributable to the issue of the
instrument. Such interest-bearing liabilities are subsequently
measured at amortised cost ensuring the interest element of the
borrowing is expensed over the repayment period at a constant
rate.
-- Loans which are initially recognised at fair value net any of
transaction costs directly attributable to the issue of the
instrument. Where the terms of a loan facility are re-arranged,
associated fees are amortised over the remaining term of the
facility. Such interest-bearing liabilities are subsequently
measured at amortised cost ensuring the interest element of the
borrowing is expensed over the repayment period at a constant
rate.
-- Trade payables, other borrowings and other short-term
monetary liabilities, which are initially recognised at fair value
and subsequently carried at amortised cost using the effective
interest method.
-- Finance charges, including premiums payable on settlement or
redemption, are accounted for on an accruals basis and are
calculated using the effective interest method and are added to the
carrying amount of the liability to the extent that they are not
settled in the period in which they arise.
-- Where a financial instrument contains an embedded derivative
within a non-derivative host contract and the embedded derivative
is not closely related to the host contract the derivative
component is accounted for separately as a fair value adjustment
through the income statement. The fair value of the instrument is
recognised on the statement of financial position with gains and
losses going through the income statement. No hedge accounting is
applied.
Fair value hierarchy
Certain of the disclosures about fair value of nancial
instruments include the classification of fair values within a
three-level hierarchy. The three levels are defined based on the
observability of signi cant inputs into the measurements as
follows:
-- Level 1: Quoted prices, in active markets;
-- Level 2: Level 1 quoted prices are not available but fair
value is based on observable market data;
-- Level 3: Inputs that are not based on observable market data.
Share capital
Financial instruments issued by the Group are treated as equity
only to the extent that they do not meet the definition of a
financial liability. The Group's ordinary shares are classified as
equity instruments.
The share premium reserve represents the surplus of
consideration paid for shares above their nominal value.
The reverse acquisition reserve represents the historic trading
losses of the accounting acquiree.
Leased assets
Where substantially all of the risks and rewards incidental to
ownership are not transferred to the Group (an 'operating lease'),
the total rentals payable under the lease are charged to the
consolidated statement of comprehensive income on a straight-line
basis over the lease term. The aggregate benefit of lease
incentives is recognised as a reduction of the rental expense over
the lease term on a straight-line basis.
Assets held under finance leases or hire purchase contracts are
recognised as assets of the Group. In accordance with IAS 17, the
ownership of a leased asset is transferred to the lessee if the
lessee bears substantially all the risks and rewards of ownership.
They are capitalised in the statement of financial position at
their fair value or, if lower, at the present value of the minimum
lease payments, each determined at the inception of the lease and
depreciated over their estimated useful lives or the lease term,
whichever is shorter.
The corresponding liability to the lessor is included in the
statement of financial position as a finance lease obligation.
Lease payments are apportioned between finance charges and the
reduction of lease obligation so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance charges
are charged to profit and loss, unless they are directly
attributable to qualifying assets, in which case they are
capitalised in accordance with the Group's general policy on
borrowing costs.
Foreign currencies
Transactions in currencies other than the local functional
currency are recorded at the rates of exchange on the dates of the
transactions. At each balance sheet date, monetary assets and
liabilities that are denominated in foreign currencies are
retranslated at the rates prevailing on the balance sheet date,
with differences recognised in profit or loss in the period in
which they arise.
On consolidation, the assets and liabilities of the Group's
overseas operations are translated at exchange rates prevailing on
the balance sheet date. Income and expense items are translated at
the average exchange rates for the period.
Share-based payments
The cost of equity-settled transactions is measured by reference
to the fair value of the instruments granted at the date at which
they are granted and is recognised as an expense over the vesting
period, which ends on the date on which the relevant party become
fully entitled to the award. Fair value is determined using the
Black-Scholes pricing model. No account is taken of any vesting
conditions other than conditions linked to the market conditions of
the Company in measuring fair value.
At each period end date before vesting, the cumulative expense
is calculated; representing the extent to which the vesting period
has expired and management's best estimate of the achievement or
otherwise of non-market conditions and of the number of equity
instruments that will ultimately vest. The movement in cumulative
expenses since the previous statement of financial position date is
recognised in the statement of comprehensive income with a
corresponding entry in the statement of changes in equity.
Upon exercise of share options, the proceeds received, net of
any directly attributable transaction costs, are allocated to share
capital up to the nominal (or par) value of the shares issued with
any excess being recorded as share premium.
Operating segments
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision maker has been identified as the
management team (excluding Non-Executive Directors) including the
Chief Executive Officer.
Management review revenue and gross profit of three continuing
separate operating segments against budget. The remaining costs,
including administrative costs and finance expenses, are reviewed
in total. Assets and liabilities of the Group are not allocated to
an operating segment.
Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the
future. Estimates and judgements are continually evaluated based on
historical experience and other factors, including the expectations
of future events that are believed to be reasonable under the
circumstances. In the future, actual experience may differ from
these estimates and assumptions. Management have considered
estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year and the only significant
matter is the directors' consideration of Going Concern which is
specifically addressed earlier in this note 2.
Software development
Software development is amortised over the useful lives of the
assets. Useful lives are based on the management's estimates of the
period that the assets will generate revenue, which are reviewed
annually for continued appropriateness. The carrying values are
tested for impairment when there is an indication that the value of
the assets might be impaired. When carrying out impairment tests
these would be based upon future cash flow forecasts and these
forecasts would be based upon management judgement. Future events
could cause the assumptions to change, therefore this could have an
adverse effect on the future results of the Group.
3 Loss per share
The calculation of the basic loss per share is based on the loss
attributable to ordinary shareholders divided by the weighted
average number of shares in issue during the period. For the
purposes of this calculation, the weighted average number of shares
is the number of ordinary shares in the period, excluding deferred
shares.
Diluted earnings per share are calculated by adjusting the
weighted average number of ordinary shares outstanding to assume
conversion of all potentially dilutive ordinary shares.
The calculation of the basic and diluted earnings per share is
based on the following data:
6 months 6 months
ended ended
31 March 31 March
2020 2019
GBP'000 GBP'000
Total comprehensive expense for the
period (1,162) (1,535)
31 March 31 March
2020 2019
Number of shares
Weighted average number of ordinary shares
of the purposes of basic earnings per
share 15,346,950 15,346,950
Effect of dilutive potential ordinary
shares from share options 418,552 418,552
-------------------------------------------- ----------- -----------
Weighted average number of ordinary shares
for the purposes of diluted earnings per
share 15,765,502 15,765,502
4 Segmental reporting
Management have defined operating segments as those on which
results are considered by the Board. Administrative expenses
(including amortisation, impairment and depreciation), finance
costs and income tax expenses are monitored centrally and are not
allocated to operating segments. Further to this, assets and
liabilities are not allocated to operating segments as they are
shared by the Group. These operating segments are monitored and
strategic decisions are made on the basis of adjusted segment
operating results. The categorised as follows:
All revenue is derived from external customers.
PPCP
PPCP UK PPCP Europe US Total
GBP'000 GBP'000 GBP'000 GBP'000
6 months ended
31 March 2020
Revenue 1,016 452 498 1,966
Cost of sales (42) (27) (131) (200)
------------------------ -------- -------------- -------- --------
Gross profit 974 425 367 1,766
------------------------ -------- -------------- -------- --------
Administrative expense (910) (484) (596) (1,990)
------------------------ -------- -------------- -------- --------
Loss before central
costs 64 (59) (229) (224)
------------------------ -------- -------------- -------- --------
Central costs (619)
Finance expense (345)
------------------------ -------- -------------- -------- --------
Loss before income
tax (1,188)
------------------------ -------- -------------- -------- --------
PPCP PPCP
UK PPCP Europe US Total
GBP'000 GBP'000 GBP'000 GBP'000
6 months ended
31 March 2019
Revenue 1,048 468 351 1,867
Cost of sales (28) (28) (69) (125)
------------------------ -------- -------------- -------- --------
Gross profit 1,020 440 282 1,742
------------------------ -------- -------------- -------- --------
Administrative expense (837) (794) (769) (2,400)
------------------------ -------- -------------- -------- --------
Loss before central
costs 183 (354) (487) (658)
------------------------ -------- -------------- -------- --------
Central costs (732)
Finance expense (185)
------------------------ -------- -------------- -------- --------
Loss before income
tax (1,575)
------------------------ -------- -------------- -------- --------
5 Share capital
Ordinary shares Deferred shares Total
No GBP'000 No GBP'000 GBP'000
Shares 31 March 2019
(Ordinary 10 pence) 15,346,950 1,535 - - 1,535
------------- -------- ------ ---------- --------
Shares 30 September
2019 (Ordinary 10 pence) 15,346,950 1,535 - - 1,535
------------- -------- ------ ---------- --------
Shares 31 March 2020
(Ordinary 10 pence) 15,346,950 1,535 - - 1,535
============= ======== ====== ========== ========
6 Share-based payments
Options over ordinary shares were granted on 13 February 2019
under the 2014 Ark Therapeutics Group plc* Enterprise Management
Incentive Share Option Plan and the 2014 Ark Therapeutics Group
plc* Unapproved Share Option Plan (together, the "Plans") at an
exercise price of 46.17 pence per share.
Options over ordinary shares that were granted on 3 March 2017
at an exercise price of 238.75 pence per share were cancelled or
surrendered during the year.
Subject to the achievement of pre-determined performance
criteria, the options granted under the Plans are exercisable three
years from the date of grant.
* Ark Therapeutics Group plc changed its name to Premier
Veterinary Group plc in March 2015.
The fair value of the options has been calculated using the
Black Scholes model. The weighted average fair value of the options
at measurement date was nil pence per option.
Options and warrants outstanding
6 months to 6 months to 12 months to
31 March 31 March 30 September
2020 2019 2019
No. No. No.
At beginning of period 418,552 399,035 399,035
------------------------------- ------------ ------------ --------------
Granted during period - 139,517 139,517
Exercised during the period - - -
Surrendered during the period - (80,000) (80,000)
Lapsed during the period - (40,000) (40,000)
------------ ------------ --------------
At end of period 418,552 418,552 418,552
------------------------------- ------------ ------------ --------------
Options exercisable
Number Weighted Latest exercise
of options average exercise date
price
At 31/03/2020 418,552 22.1p 12/02/2029
--------------- ------------ ------------------ ----------------
At 31/03/2019 418,552 22.1p 12/02/2029
--------------- ------------ ------------------ ----------------
At 30/09/2019 418,552 22.1p 12/02/2029
--------------- ------------ ------------------ ----------------
The fair value of share options expense recognised in the year
is determined using the Black-Scholes model, which takes into
account the terms and conditions upon which the shares were
awarded. For this purpose, a share price of 238.75p, volatility of
30.6% and a risk-free rate of 0.5% was assumed. The Group
recognised a charge GBPNil (6 months to 31 March 2019: GBPnil) in
relation to share based payments in the period.
There were no options and warrants exercised during the period
(6 months to 31 March 2019: nil).
7 Related party transactions
The Group operates the Ark Therapeutics Group plc Family Benefit
Trust ("FBT"). Amounts due from the FBT were GBPNil (31 March 2019:
GBPNil)).
On 25 January 2019 a secured term loan facility was provided by
Bybrook Financial Services Limited ("BFSL") of GBP3,850,000.
GBP1,500,000 was provided to repay previously issued loan notes and
GBP2,350,000 was provided for the purposes of financing working
capital and paying the arrangement fee. The facility was repayable
24 months after the date of the agreement. In the event of early
repayment, the interest for any unexpired period to the end of the
full term would become payable.
On 29 January 2020 the Group announced that an agreement had
been reached whereby BFSL has agreed to the roll up of monthly
interest payments and the extension of the repayment date of the
GBP3.85m facility and accrued interest to 31 July 2021.
In addition, PVG entered into a further agreement with BFSL to
provide an additional secured loan facility of GBP1.1m. The first
tranche of GBP0.6m was drawn on 29 January 2020 with two further
tranches of GBP0.25m each available for draw down at PVG's request
on 22 May 2020 and 24 July 2020. These further tranches could only
be drawn by PVG if on or before 30 April 2020 it had issued BFSL
with warrants to subscribe for up to 383,673 new PVG ordinary
shares of 10p each at an exercise price of 10p per share within 5
years of the issue of any such warrants. Interest of 1% per month
accrues on the loan facility on a monthly compound basis and is
added to the total loan amount. The total loan together with
accrued interest would have been repayable on 30 April 2020 with an
option for PVG to extend the repayment date to 31 July 2021 by
issuing the warrants referred to above.
As a result of the occurrence of the Coronavirus (Covid-19)
pandemic and the imposition of a lock down by the UK Government
PVG's Annual General Meeting due to take place on 31 March 2020 was
postponed and the Warrants could not be issued because PVG did not
have a valid authority to issue shares. Accordingly, the repayment
date was not extended and BFSL no longer has an obligation to make
any further advances to PVG under the 2020 Facility.
On 1 May 2020 PVG and BFSL entered into further deeds of
amendment that provide for (i) the waiver of events of default that
have occurred under the 2019 Facility and the 2020 Facility as a
result of actions taken by PVG in light of the Coronavirus
(Covid-19) pandemic and (ii) the extension of the repayment date in
the 2020 facility to 31 July 2021.
At 31 March 2020, amounts owed to BFSL were GBP4,627,724 (31
March 2019: GBP3,850,000). Interest and arrangement fees charged
during the period were GBP345,816 (6 months to 31 March 2019:
GBP185,312).
Rajan Uppal a director of the Company is the sole shareholder
and director of BFSL.
Crossroads Finance Limited, a company jointly owned and
controlled by Dominic Tonner, Chief Executive Officer of PVG, and
his spouse, participated in the funding of the GBP3.85m facility by
entering into direct arrangements with BFSL.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR SEMFMIESSEEM
(END) Dow Jones Newswires
June 26, 2020 02:00 ET (06:00 GMT)
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