Premier Veterinary dogged by cash issues despite better sales

(Sharecast News) - Premier Veterinary shares crashed on Wednesday as it warned that the company needed more funds to continue with management's plans and reported a disappointing US performance.In a pre-close trading update the petcare provider said it expects to report a loss before interest, tax, depreciation and amortisation of roughly £3.25m for the year ended 30 September, despite seeing revenues rise 24% to £3.15m. In the first half of the year losses after tax from continuing operations were £1.94m and made a LBITDA of £3.8m last year.PVG said it "requires additional funding to support the directors' going concern assessment", maximise the growth opportunities and to reach overall profitability. Management has received outline terms from corporate development director Rajan Uppal's BFSL vehicle for a "long term secured loan facility with an increased level of funding and earlier drawdown dates" that will be used to replace the company's existing loan. Chief executive Dominic Tonner's Crossroads Finance Limited is expected to partake in the funding by entering into direct arrangements with BFSL. The independent directors of PVG "are discussing those terms with BFSL whilst the full board are ascertaining what alternative funding arrangements may also be available" and said they "are confident of being able to raise the additional finance required".Operationally, PVG's recurring revenue streams, driven by the number of pets signed up to its pet care plan, were given a boost as 244,000 pets had signed up to its programme by the end of September, a significant improvement on the 118,000 on the books a year earlier.In the UK, revenues came in at the very bottom end of guidance, while US revenues fell short of management expectations. The group has rested all its hopes on a new stateside contract with a "major corporate veterinary consolidator".Premier also revealed that it was in advanced discussions to finalise an agreement with "a leading UK corporate group" to provide collection, administration and support services to facilitate the provision of animal health plans.In the US, the number of pets on plan increased to 9,000 from 4,000 over the year but revenue of roughly £0.4m was below management's expectations.In August the company agreed a pilot programme to introduce PVA's preventative healthcare programme for pets, branded 'Premier Pet Care Plan', with a US companion animal hospital operator. The three- to six-month pilot is being put in place in 15 of the potential client's 140 hospitals and has the potential to be extended to a three-year term with a full roll out to all of the customer's hospitals. This, management said, would be "pivotal" in driving the US business towards profitability.As of 0940 BST, Premier Veterinary shares had crashed 38.37% to 53p.