Full year results presentation Year ended 30 September 2017 - C
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Full year results presentation Year ended 30 September 2017 C
Disclaimer
For the purposes of this notice, "presentation" means this document, its contents or any part of it, any oral presentation, any question or answer session and any
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nor does it constitute a recommendation regarding the securities of the Company.
The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change without notice. In furnishing this
presentation, the Company does not undertake or agree to any obligation to provide you with access to any additional information or to update this presentation or to
correct any inaccuracies in, or omissions from, this presentation that may become apparent. You should make your own independent evaluation of the Company and
should make such other investigations as you deem necessary.
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Certain statements, beliefs and opinions in this presentation are "forward-looking statements". These statements reflect the Company's, or as appropriate, the
Company's directors' current expectations and projections about future events. Such forward-looking statements involve risks, uncertainties and other important
factors beyond the Group’s control that could cause the actual results, performance or achievements of the Group 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 Group’s present and future business strategies and the environment in which the Group will operate in the future. Forward-looking statements contained
in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. These forward-
looking statements speak only as of their date and the Group and its directors, officers, employees, agents, affiliates and advisers expressly disclaims any obligation or
undertaking to supplement, amend, update or revise any of the forward-looking statements contained in this presentation to reflect any change in the Group’s
expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based, except where it would be required to
do so under applicable law. As a result of these factors, you are cautioned not to place undue reliance on such forward-looking statements.
1
Highlights
• 35% increase in global pets on plan to 188,000 (2016: 139,000)
• 36% increase in Group continuing revenues to £2.53m (2016: £1.87m)
• 50% increase in contracted clinics now totalling 1,084 in UK, Europe and US
• 29% increase in the number of pets on plan in the UK to 156,000 (2016: 121,000)
• £5.9m net cash proceeds after transaction costs from sale of the Premier Buying Group
• £3.2m of cash at 30 September 2017 (2016: net cash of £0.4m)
• US challenges being addressed
Post Balance sheet highlight
• £1.5m committed funding facility agreed - provides security of funding and flexibility to consider alternative sources of
funding.
2
Business Fundamentals
• Sticky and diverse customer base
• Recurring revenue stream with compound growth
• Bespoke scalable IT platform underpinning international operations
• No bad debt exposure
• Growth opportunity underpinned by cooperation agreements (Mid- West, Zoetis, MVS, VPI, PSI, TVC, MSD France)
3
Premier Pet Care Plan
4
What are Preventative Health Plans?
Revenue streams come from:
• transaction fee per pet per month (Direct Debit,
SEPA, Credit card), plus
• set up fee per new pet plus
• practice set up fee plus
• manufacturer support fees
• Our service includes:
• Plan pricing
• Plan design
• Training and process integration
• Marketing
• Ongoing support and training
• Global IT platform and transaction processing
5Benefits of the Plan
All parties stand to benefit:
• Veterinary Clinics
• Distribution
• Pet Owners
• Manufacturers
6Strategy
7Global IT Platform
• Continued investment in Global IT
platform - £196k capex in FY 2017
Customer interface &
Data capture Global PCP Web Portal
• FY 2017 achievements:
• Rollout of portal throughout UK
and Europe improving customer
experience
WorldPay Finastra • Additional functionality to
GoToBilling support US
Credit Card BACS
Gateway Active
• Ongoing investment
• Ongoing improvements in
Payment Processing Systems resilience and security
• Enhanced collection methods
Citizen NETS SEPA BACS • Client reporting
Bank Clearing Clearing Clearing
8UK
UK Market Share/Opportunity
• UK market continues to present opportunities
for growth
Independent PVA Pet
Care Plan Clinics
8% • 29% annual increase in pets on plan to
Current PVA Medivet
PPCP - Market 156,000 at September 2017
PPCP Opportunity
3%
57%
• 18% growth in clinics operating PPCP
Vetpartners
4%
• PPCP serves both independent and corporate
Vets4Pets customers
9%
Linnaeus
1% CVS
9% IVC
9%
Total small animal clinics in UK – c4,800
Source: independent market research, company investor
presentations
9Europe - Netherlands
Rayons • 190 contracted clinics at 30 September 2017
aantal EGG's
North (46)
• Represents approximately 19% market
Middle (37)
South (46)
share
Netherlands Market
Share/Opportunity
• 46% annual growth in pets on plan to 24,000
at September 2017
19%
• Acquired customer base of competitor in
Netherlands
• Customer base being transitioned over
81%
coming months
PVA Pet Care Plan • Expected to become profitable during
Market Opportunity FY2018
Estimated small animal clinics
– c1,000
Source: KNMvD: Koninklijke Nederlandse
Maatschappijvoor Diergeneeskunde (Royal
Veterinary Association of the Netherlands)
10Europe - France
• 50 clinics signed up to PPCP during this
year (see map)
France Market Opportunity
• 33 clinics launched at 30 September 2017
1%
• Over 1,000 pets on plan
17%
• Initial sign up rates are encouraging
82% • Cooperation agreement with MSD Animal
Health producing leads
Pet Care Plan primary targets
• Cooperation agreement with Clubvet, one
Remaining market opportunity
of France’s largest buying groups
Contracted clinics
Estimated small animal clinics
• Territory showing early promise
Location of contracted clinics
– c6,000
Source: l’Ordre national des veterinaires” (
National Register of Veterinarians)
11USA
• Registered in 22 states (highlighted)
• Business focussed in South-Eastern and Mid-West States
• Recent cooperation agreements signed with:
• Purchases Services Holdings (“PSI”) – Group purchasing
organisation with over 4,000 members
• The Veterinary Cooperative (“TVC”) – Group purchasing
organisation with over 3,000 members
• 198 clinics signed contracts to launch PPCP at 30 September 2017
• 92 clinics launched at 30 September 2017
• 4,000 pets on plan
• US challenges being addressed. Focussed on:
• Improving sign up rates
Total small animal
clinics – c26,500
• Reducing cancellations
(UK c4,800) • Increasing average clinic size
• Leveraging partnership agreements
12Key Performance Indicators
13Global quarterly collection statistics
• 553,000 transactions in Q3 2017
(equivalent to 2.2m annual
transactions) – 38% increase on same
quarter last year
• Customer spend of £8.25m in Q3
2017 (equivalent to £33.0m
annualised spend)
• Generates sticky revenues for PVG
• 35% increase in pets on plan in last
twelve months
• 188,000 fee generating pets in
September 2017 with growth in all
regions
# fee generating pets on plan
000's Sep - 16 Dec - 16 Mar - 17 Jun - 17 Sep - 17
UK 121 132 137 145 156
Europe 18 21 22 25 28
US - 1 2 3 4
Total 139 154 161 173 188
14Global clinic relationships
Global Clinic Relationships at 30 September 2017
UK USA EU
• In total PVG now has 1,084 clinics
1200
contracted to PPCP
1,084
1000 • Important influence when
311 negotiating with pharmaceutical
manufacturers and
800 wholesalers/distributors
NO. OF CLINICS
198
600
1000
400
750
575
200 440 432 438
0
P VG I VC (UK ) CVS (UK ) P ETS AT HO ME ( UK ) B ANF I ELD ( US ) VCA (US)
15Diverse Customer Base
• Total of 455 contracts with
practices throughout UK, EU
& US.
• Only Medivet, the group’s
largest customer practice has
over 10,000 pets on plan.
• 95% of practices have less
than 1,000 pets on plan.
16Financials
17Profit and Loss - revenues
Year ended 30 September 2017 Revenues • 36% increase in global revenues
£000s 2017 2016 % change
• 17% UK revenue growth in line with plans.
PPCP – UK 1,873 1,606 17%
• Ongoing opportunities for revenue growth from
PPCP – Europe 493 263 87% existing customers and new opportunities
PPCP – US 168 - N/A
• 87% European revenue growth
Total - continuing operations 2,534 1,869 36%
• Netherlands the key source of growth in FY 2017
• France in early stage of development
• US revenue growth behind expectations due to
reductions in the rate of pet sign ups and higher
cancellation rates than expected
• US remains the largest single opportunity for
additional growth
18Profit and Loss – profits and EBITDA
Year ended 30 September2017 Profits
• Significant people and operating cost investment in both
%
Europe and US resulting in an increased operating loss
£000s 2017 2016 change
PPCP – UK 622 442 41% • Operating expense investment in IT development and
PPCP - Europe (983) (809) (21)% finance team in UK to support expansion and
development requirements
PPCP – US (1,895) (635) (198)%
EBITDA from PPCP (2,256) (1,002) • No executive bonus reducing central unallocated costs
Central unallocated costs (1,546) (1,908)
• One-off items incurred mobilising US investment and on
EBITDA from continuing operations (3,802) (2,910) legal costs to acquire customer base in Netherlands
One-off items (172) -
Depreciation and amortisation (134) (77) • Finance expense reduced following repayment of debt
after veterinary practices business disposal
Operating profit (4,108) (2,987)
Finance expense (161) (208) • Profit on discontinued operation in 2017 represents
Loss before and after tax from continuing operations (4,269) (3,195) trading profit of Buying Group up to date of disposal and
gain on disposal
Profit on discontinued operations 5,890 5,019
Profit attributable to equity holders 1,621 1,824
19Balance sheet
As at 30 September • Trade and other receivables reduced following receipt of
£000s 2017 2016 escrow money from sales of veterinary practices
business
Non-current assets 495 446
Trade and other receivables 705 1,719 • Sale of Buying Group enhanced net asset position
Trade and other payables (977) (871)
• Part of Buying Group proceeds used to repay loan notes
Net working capital (272) 848
Cash 3,218 1,254 • Deferred tax liability increase due to rollover relief being
Debt - (900) claimed on Buying Group disposal
Net cash/(debt) 3,218 354
Deferred tax (134) (10)
Net assets 3,307 1,638
20Cash flow
Year ended 30 September 2017
• Significant investment in international expansion
£000s 2017 2016
impacting EBITDA
£'000 £'000
EBITDA after central costs and non-recurring items (3,802) (2,910)
• Ongoing capital investment in IT around £250k per
Non-recurring items (172)
annum
Net working capital movement (74) (136)
Investment in IT and equipment (276) (210)
• Net disposal proceeds in 2016 relate to veterinary
Interest on loans and finance leases (161) (208)
practices business
Free cash flow (4,485) (3,464)
Net disposal proceeds 6,963 5,047
• Net disposal proceeds in 2017 include £1m escrow
Discontinued activities 338 881
release from disposal of veterinary practices and
Issue of share capital 48 97 balance relating to sale of Buying Group
Movement in net cash/(debt) 2,864 2,561
• Post balance entered into a committed facility with
Opening net debt 354 (2,207) Bybrook Finance Solutions Limited (“BFSL”) for up to
Closing net cash/(debt) 3,218 354 £1.5m in unsecured loan notes for drawdown in three
equal tranches from 1 June 2018 to 31 May 2019.
Net debt made up of; • Arrangement provides security of funding whilst
Cash 3,218 1,254 being sufficiently flexible to continue to consider
Debt - (900) alternative sources of funding.
3,218 354
21Business Fundamentals
• Sticky and diverse customer base
• Recurring revenue stream with compound growth
• Bespoke scalable IT platform underpinning international operations
• No bad debt exposure
• Growth opportunity underpinned by cooperation agreements (Mid- West, Zoetis, MVS, VPI, PSI, TVC, MSD France)
22Appendix
23Market opportunities
Market data UK Neth Germany France USA
Population 64m 17m 81m 66m 319m
Households 26m 7.4m 41m 26m 123m
Dog population 8.5m 1.6m 5.3m 7.4m 70m
Dog ownership households 24% 19% 13% 21% 36%
Cat population 8.5m 2.6m 8.2m 11.4m 74m
Cat owner households 19% 26% 16% 27% 30%
24Thank you for your time
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