Premier Veterinary (LSE:PVG)
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RNS Number : 5037R

Premier Veterinary Group PLC

22 September 2017

PREMIER VETERINARY GROUP PLC

("PVG", the "Company" or the "Group")

Trading update

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES OF ARTICLE 7 OF THE MARKET ABUSE REGULATION (EU) 596/2014

London, UK, 22 September 2017 - Premier Veterinary Group plc (LSE: PVG) provides the following update on trading. All references in this statement refer to the continuing operations of the business, which excludes the Buying Group business which was sold on 30 April 2017.

Group turnover for the year ending 30 September 2017 is expected to exceed GBP2.5m representing growth of 35% on the previous year. EBITDA for the year is expected to be in line with market expectations.

The Group's recurring revenue streams are driven by the number of pets that are signed up to Premier Pet Care Plan ("PPCP"), a preventative healthcare programme for pets. The number of revenue generating pets on active plans for the third quarter of its 2017 financial year, and in the preceding four quarters was as follows:

 
000's                             As at     As at    As at    As at    As at 
                                 Jun-16   Sept-16   Dec-16   Mar-17   Jun-17 
United Kingdom                      115       121      132      137      145 
Europe                               14        18       21       22       25 
US                                    -         -        1        2        3 
                                -------  --------  -------  -------  ------- 
 
  Total no. of fee generating 
          pets on plan              129       139      154      161      173 
 

The number of revenue generating pets on plan is expected to exceed 185,000 at the end of the financial year representing growth in excess of 33%.

Outlook

The UK and Europe continue to perform in line with the Board's expectations.

The US remains a key focus for the business representing our largest growth opportunity.

As reported on 30 April 2017, a number of differences between the UK and US markets has necessitated a different approach to certain elements of the provision of preventative healthcare plans in the US. The key difference relates to the sensitivity to working capital in US veterinary hospitals. This sensitivity had resulted in both the rate of clinic sign up reducing and a reduction in the rate of pet sign ups after the initial launch. A number of initiatives were implemented to address these issues.

These initial changes resulted in increased activity in clinics signing up to PPCP and the level of clinic sign ups in June through to August 2017 has been the highest that has been achieved since starting operations in the US. However, the initiatives that have been implemented are taking longer than originally expected to reverse the slow down in pet sign up rates after the initial launch and further enhancements are now being implemented, which requires additional investment.

As a result of the above, it is estimated that a further period of twelve months may be required to achieve the volumes previously envisaged in the US and accordingly the Board expect the Group's sales and profits for the next financial year to be materially below the Board's previous expectations.

Overview of PPCP developments in each region

US

The prospects for the US remain encouraging and positive progress has been made in the following areas:

-- Fee generating pets on plan by the financial year end are expected to be approximately 4,000.

-- Contracts have been signed with 189 clinics to implement PPCP. 90 clinics have been launched with the remainder in the launch pipeline.

-- A further cooperation agreement has been signed with Purchases Services Holdings LLC ("PSI") whereby PSI will promote PPCP and provide leads to develop our sales pipeline. PSI is a group purchasing organisation with over 4,000 active members.

-- A number of discussions are taking place with other distributors and group purchasing organisations and further updates will be provided in due course.

-- The operational infrastructure has been expanded rapidly to address the demand and geographical reach of opportunities in the US.

   --      The business is operating in 22 states and currently has a team of 16 people. 

Given the strong pipeline of sales, the Board of PVG remains confident that the opportunity to access a significant segment of the available US market still exists. The total number of dogs and cats across the US is estimated at 70 million and 74 million respectively (U.S. Pet Ownership & Demographics Sourcebook 2012).

United Kingdom

In the United Kingdom, the number of pets on PPCP at the end of the year are expected to exceed 155,000, representing growth of approximately 28% on last year. Revenues are expected to be approximately GBP1.85m, achieving growth in excess of 15%.

The Group's UK PPCP business continues to see opportunities for growth both from its existing client base and new customer opportunities.

Europe

In Europe, the number of pets on PPCP for the year are expected to exceed 26,000, representing growth of approximately 50% on last year. Revenues are expected to be approximately GBP0.45m, achieving growth in excess of 70%.

The most significant operation in Europe, branded as Huisdieren Zorg Plan ("HZP"), is in the Netherlands, with 187 contracted clinics. The territory is expected to have approximately 23,000 pets on plan at the end of September 2017, representing a 38% increase for the year.

On 20 September 2017, the group acquired the customer base of a small competitor in the Netherlands. This provides an opportunity for HZP to migrate and relaunch these customers on to the Group's platform. As a result of the organic growth and acquisition, HZP will have approximately 20% market share in the Netherlands, is close to profitability and will become cash generative in the near future.

The French operation, branded as "Premier VetoPlan" ("PVP") commenced in the early part of this financial year since when 49 clinics have contracted to launch PVP and 25 of these have been launched at this stage. Pets on plan are expected to exceed 1,000 by the financial year end. Our progress in this territory is now being supported by a major pharmaceutical company.

Financing

The Group is expected to have cash at the end of September 2017 of approximately GBP3 million. In order to finance the continued investment in the US, the Group is expected to require additional funding from Quarter 3 of the financial year ending September 2018. This, in part, will be funded from a reduction in the estimated tax charge on the disposal of the Buying Group following clarification of the treatment of brought forward tax losses. The directors are confident of being able to raise the additional finance required and are considering a number of options.

Dominic Tonner, Chief Executive Officer of PVG, commented:

"While it is disappointing that the challenges in the US are taking longer to overcome, PVG has developed a significant presence in this territory entirely through organic growth including entering into cooperation agreements with major industry players, working across 22 states and contracting with 189 veterinary clinics and it remains a significant opportunity for the Group. It is pleasing that the UK and Europe have performed in line with our expectations and the Netherlands is expected to become cash generative in the near future."

For further information, please contact:

Premier Veterinary Group plc Tel: +44 (0)117 970 4130

Dominic Tonner, Chief Executive Officer

Will Evans, Chief Financial Officer

Note to Editors:

PVG's services to third party veterinary practices, through its wholly-owned subsidiary, Premier Vet Alliance Limited ("PVA"), include the administration and support of a preventative healthcare programme for pets branded "Premier Pet Care Plan" ("PPCP"). In the US, where veterinary practices are known as veterinary hospitals, PPCP is marketed through the Company's wholly-owned subsidiary, Premier Vet Alliance (US) Limited.

PPCP is a structured, preventative healthcare programme for cats, dogs and rabbits and is available only through veterinary practices/hospitals. The programme is seen as a way of providing gold standard care for pets at an affordable price for the client, by way of fixed monthly payments.

PPCP uses a clinical approach to prevention, as this is the most effective method of ensuring illnesses are diagnosed more

quickly and not given a chance to advance. What truly sets PPCP apart is its unique approach of offering an end-to-end solution and support to the practice/hospital, which has been proven to work extremely well. PVA works alongside practices/hospitals to create a tailor-made, cost-effective service for clients, one that delivers excellent care to their patients and significantly improves practice/hospital performance.

For further details:

http://www.premiervetgroup.co.uk/

This announcement includes "forward-looking statements" which include all statements other than statements of historical facts, including, without limitation, those regarding the Company's financial position, business strategy, plans and objectives of management for future operations, and any statements preceded by, followed by or that include forward-looking terminology such as the words "targets", "believes", "estimates", "expects", "aims", "intends", "will", "can", "may", "anticipates", "would", "should", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Company's present and future business strategies and the environment in which the Company will operate in the future. These forward-looking statements speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward- looking statements contained in this announcement to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based. As a result of these factors readers are cautioned not to rely on any forward-looking statement.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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September 22, 2017 02:00 ET (06:00 GMT)