PVG.L Regulatory News (PVG)

PREMIER VETERINARY GROUP PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2015

29 May 2015:  Premier Veterinary Group plc ("PVG" or the "Company") today announces its interim results for the six months ended 31 March 2015.

HIGHLIGHTS

· In November 2014: the Company (formerly known as Ark Therapeutics Group plc) announced it had agreed in principle (subject to contract) terms with the majority shareholders of Premier Veterinary Group Limited (now known as PVG 2007 Limited) ("PVGL") to acquire the entire issued share capital of PVGL (the "Acquisition").  PVGL comprises two distinct but complementary businesses; the operation of veterinary practices and the provision of products and services to third party practices via its wholly-owned subsidiary Premier Vet Alliance Limited ("PVA").

· In December 2014: the shareholders of Ark Therapeutics Group plc agreed in a General Meeting to all resolutions proposed in relation to the Acquisition including the transfer of listing category on the Official List from premium (commercial company) to standard.

· In January 2015: completion of the transfer of the listing category on the Official List from the premium segment to the standard segment took place.

· In February 2015:

· Ark Therapeutics Group plc acquired PVGL by way of a reverse acquisition.

· Subscription of £1.2m in ordinary shares and admission to the standard listing segment of the Official List of the UK Listing Authority and admission to trading on London Stock Exchange plc's main market for listed securities.

· Dominic Tonner, Daniel Smith and Raj Uppal appointed as Chief Executive Officer, Chief Financial Officer and Corporate Development Director, respectively.

· In March 2015:

· Change of name to Premier Veterinary Group plc.

· Graham Dick BVSc MRCVS appointed as Non-Executive Director.

· Trade and assets of WVS Limited (a wholly owned subsidiary of PVG) were sold.

Overview of results

· PVG's total (continuing and discontinued) revenues increased by 3% to £3.88m for the six months ended 31 March 2015 (£3.76m six months ended 31 March 2014).

· On 31 March 2015 the trade and assets of WVS Limited (WVS) were sold for a consideration of £0.2m payable in cash. WVS was a sole practice operating outside of PVG's core geographical areas. For the 6 month period ended 31 March 2015 it generated revenues of £0.095m and incurred a pre-tax loss of £0.012m not taking into account the impact of the sale of the trade and assets.

· Revenues for the remainder of PVG's veterinary practices for the six months ended 31 March 2015 were £2.71m broadly in line with the corresponding period last year. Profitability was however significantly increased (gross profit increased from 45% to 52%) as a result of initiatives put in place during 2014.

· PVA's revenues for the six months ended 31 March 2015 increased by 18% to £1.07m (£0.91m six months ended 31 March 2014).

· Operating profit of £0.1m for the six months ended 31 March 2015 (31 March 2014: 0.3m loss).

· Net cash outflow from operating activities for the six months ended 31 March 2015 of £0.1m (six months ended 31 March 2014: £0.9m).

· Loss after tax for the six months ended 31 March 2015 was £0.4m (six months ended 31 March 2014: a loss after tax of £0.9m).

· Cash and short term deposits of £1.0m as at 31 March 2015 (at 31 March 2014: £1.5m).

Post period events

As announced on 29 April 2015, PVG's year-end has been changed from 31 December to 30 September to bring it into line with its subsidiaries. 

Commenting on the results, Dominic Tonner, Chief Executive Officer of Premier Veterinary Group plc said:

"In line with the Trading Update issued on 29 April 2015, the Company today is pleased to announce the first results of the Enlarged Group for the six months ended 31 March 2015."

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Cautionary statement

This Interim Management Report ("IMR") has been prepared to provide additional information to shareholders to assess the Company'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 IMR represents a continuation of PVG 2007 Limited group financial results in accordance with the reverse acquisition accounting policy described in the accounting policies.

INTERIM MANAGEMENT REPORT

Introduction

As more fully described in the 2014 Annual Report, in November 2014 the Company announced that it had agreed in principle (subject to contract) terms with the majority shareholders of Premier Veterinary Group Limited (now known as PVG 2007 Limited) ("PVGL") to acquire the entire issued share capital of PVGL (the "Acquisition"). In order to facilitate the Acquisition, the Company proposed to transfer its listing category on the Official List from premium to standard. At the general meeting in December 2014 shareholders approved the transfer and the change took place on 15 January 2015.

At the end of January 2015 the Company announced that it had entered into a share sale and purchase agreement with Raj Uppal, Dominic Tonner and Berkeley Burke Trustee Company Limited (the trustee of Mr Tonner's pension scheme) to acquire 75.8% of the issued share capital of PVGL. The sellers invoked the drag-along provisions contained in PVGL's articles of association to enable the Company to acquire the entire issued share capital of PVGL. The aggregate consideration payable to all PVGL shareholders was £3,731.18 in cash.

On 5 February 2015 the Company announced that the Acquisition had completed. However, the Company's shares remained suspended pending publication of a prospectus seeking re-admission of the Company's shares on the standard segment of the Official List and to trading on the Main Market of the London Stock Exchange (the "Prospectus"). The Prospectus was published on 26 February 2015 and the re-admission of the Company's entire issued Ordinary Share capital to the standard listing segment of the Official List of the UK Listing Authority and to trading on the main market for listed securities of London Stock Exchange plc became effective on 27 February 2015 ("Admission").

A number of investors had conditionally agreed to subscribe for shares for an aggregate value of £1.2m at an issue price per share of 10.1 pence against a then nominal value per share of 10 pence (the "Subscription"). On 11 December 2014, in order to facilitate this, the Company's share capital was reorganised by a special resolution to create Ordinary Shares with a nominal value of 10 pence each and a Deferred Share with a nominal value of 90 pence. Simultaneous with Admission, the Subscription also took place and the monies will primarily be used as working capital in the Enlarged Group's business (the "Enlarged Group" being the Company and its group companies following completion of the Acquisition). As a result of this investment, the Company's existing shareholders owned 15% of the Ordinary Shares at Admission.

Further to the approval of shareholders at the general meeting in December 2014, with effect from 5 March 2015 Ark Therapeutics Group plc changed its name to Premier Veterinary Group plc to reflect the Company's new business model and strategy.

Overview and strategic update

As announced on 29 April 2015, PVG's year-end has been changed from 31 December to 30 September to bring it into line with its subsidiaries. Accordingly these results for the six months ended 31 March 2015 are the first results of the Enlarged Group and will be followed by an annual financial report to 30 September 2015.

The Company was, immediately prior to the Acquisition, deemed to be a cash shell and as such was not classified as a business under IFRS 3 Business Combinations and, therefore, the Acquisition was outside the scope of IFRS 3. As such, in accordance with Listing Rule LR 5.6.4, and by virtue of the relative size of PVGL when compared to the Company, the accounting acquirer was determined to be PVGL and the accounting acquiree, the Company. These results for the six months ended 31 March 2015 have, therefore, been prepared on the basis that the Company has been acquired by PVGL and, notwithstanding that the Acquisition was made on 5 February 2015, the results include the full six months to 31 March 2015 of PVGL's trading activities. The results for the year ending 30 September 2015 will include the full year of PVGL's trading activities to that date.

PVG comprises two distinct but complementary businesses; the operation of veterinary practices and the provision of products and services to third party practices via its wholly-owned subsidiary Premier Vet Alliance Limited ("PVA").

Veterinary Practices

On 31 March 2015 the trade and assets of WVS Limited ("WVS") (a wholly owned subsidiary of PVG) were sold for a consideration of £0.2m payable in cash. After accounting for certain costs it is expected that there will be a positive impact on cash and net assets. WVS was a sole practice operating outside of PVG's core geographical areas.

Revenues for the remainder of PVG's veterinary practices for the six months ended 31 March 2015 were £2.71m broadly in line with the corresponding period last year. Profitability was however significantly increased (gross profit increased from 45% to 52%) as a result of initiatives put in place during 2014.

PVA

PVA's revenues for the six months ended 31 March 2015 increased by 18% to £1.07m (£0.91m six months ended 31 March 2014). The number of pets covered by PVA's Pet Care Plan on behalf of third party practices in the UK has increased by 72% to 56,629 as at 31 March 2015 (32,483 as at 31 March 2014). The number of PVA's Buying Group members has increased by 10% to 323 as at 31 March 2015 (305 as at 31 March 2014). During this period the monthly cash value of the direct debit collections has increased by 71% to £887,004 (£518,506 as at 31 March 2014).

Pet Care Plan is currently being rolled out across all of Medivet's UK practices pursuant to a three year agreement. Medivet, a limited liability partnership, is the largest privately owned veterinary group in the UK and has 114 practices in the UK.

As stated in the 2014 Annual Report, following the Acquisition the Company's strategy is to:

· increase turnover in its veterinary business through a combination of generating organic growth in its existing practices and establishing a wider footprint;

· leverage the success of PVA; and

· develop other new opportunities for growth.

Progress against this strategy will be reported in the 2015 Annual Report for the year ended 30 September 2015.

Sales volume and revenue growth

A key element underpinning the Enlarged Group's strategy is to deliver sales volume growth and revenue growth in the veterinary practices, Pet Care Plan and Buying Group business areas. Sales volume growth is measured by the number of pets covered under the Pet Care Plan and the number of Buying Group members.

As reported above, PVA's revenues for the six months ended 31 March 2015 increased by 18% to £1.07m (£0.91m six months ended 31 March 2014). The number of pets covered by PVA's Pet Care Plan on behalf of third party practices in the UK has increased by 72% to 56,629 as at 31 March 2015 (32,483 as at 31 March 2014). The number of PVA's Buying Group members has increased by 10% to 323 as at 31 March 2015 (305 as at 31 March 2014).

Operating profit

Whilst the Enlarged Group aims to take a long-term perspective on shareholder value, it also monitors the financial performance of each of its businesses in the shorter term. The KPI used in this monitoring process is operating profit before exceptional items. This measure is used to evaluate the performance of each business, including pricing, overhead and operating cost control.

During the six months ended 31 March 2015 the Enlarged Group achieved an operating profit of £0.1m (31 March 2014: £0.3m loss).

Return on capital employed

Return on capital employed (ROCE) represents operating profit before exceptional items as a percentage of average capital employed. Capital employed is defined as fixed assets plus current assets less current liabilities, excluding all balances related to interest-bearing assets and liabilities, any derivative financial instruments, any deferred tax balances and any pension assets or liabilities. It is a key indicator of how the Company is making use of its available capital, and is a good reflection of the performance of the Company in terms of both earnings and cash flow.

ROCE for the period was 2.39% (six months ended 31 March 2014: (10.93)%).

Operating cash flow

Operating cash flow is the amount of cash generated by the Enlarged Group through its trading activities, before investment in capital expenditure. This measure is used to evaluate the performance of each business and to assist the management of working capital.

Net cash outflow from operating activities for the period was £0.1m (six months ended 31 March 2014: £0.9m).

Debt

Net debt/earnings before interest, tax, depreciation, and amortisation (EBITDA) measures the liquidity of the Enlarged Group.

The principal measure used to monitor the strength of the Enlarged Group's balance sheet is the gearing ratio, which expresses the Enlarged Group's net debt as a percentage of its net assets.

The debt ratio for the period was 14 (six months ended 31 March 2014: (21)).

Financial Review

The Company's loss after tax for the six months ended 31 March 2015 was £0.4m (six months ended 31 March 2014: a loss after tax of £0.9m). The improvement on the prior year is a result of operational efficiencies put into place by management during 2014 which were fully in place by the end of 2014.

PVG's total revenues increased by 3% to £3.88m for the six months ended 31 March 2015 (£3.76m six months ended 31 March 2014). On 31 March 2015 the trade and assets of WVS Limited (WVS) were sold for a consideration of £0.2m payable in cash. After accounting for certain costs it is expected that there will be a positive impact on cash and net assets. WVS was a sole practice operating outside of PVG's core geographical areas. For the six months ended 31 March 2015 it generated revenues of £0.095m and incurred a pre-tax loss of £0.012m not taking into account the impact of the sale of the trade and assets.

Revenues for the remainder of PVG's veterinary practices for the six months ended 31 March 2015 were £2.71m broadly in line with the corresponding period last year. Profitability was however significantly increased (gross profit increased from 45% to 50%) as a result of initiatives put in place during 2014. PVA's revenues for the six months ended 31 March 2015 increased by 18% to £1.07m (£0.91m six months ended 31 March 2014) driven by increased numbers of pets covered by PVA's Pet Care Plan, a preventative healthcare plan for companion animals. Revenue generated from PVA's Buying Group, which provides independent veterinary practices with enhanced discounts and rebates, was in line with the prior year.

Other administrative expenses for the period totalled £2.6m which included certain costs in relation to the disposal of WVS (six months ended 31 March 2013: £2.5m). The share-based compensation charge for the period was £0.002m (six months ended 31 March 2014: £nil).

Net assets/(liabilities) were £0.4m at 31 March 2015 (at 31 March 2014: (£0.7m)). Cash and short-term deposits were £1.0m as at 31 March 2015 (at 31 March 2014: £1.5m).

Post-retirement benefits

The PVG Group operates a defined contribution pension scheme and the pension charge represents the amounts payable by the PVG Group to the fund and into personal arrangements in respect of the period. 

Events after balance sheet date

There have been no events after the balance sheet date which require adjustment or disclosure in these interim financial statements.

Related party transactions

As at 31 March 2015, by virtue of his shareholding, Raj Uppal is considered to be the controlling party of the Group.

Bybrook Financial Solutions Limited ("BFSL") and Bybrook 2014 Limited ("BY2014") are considered to be a related party due to being under common control of Raj Uppal.

PVG (2007) Limited was a tenant in a property owned by BY2014, paying £10,600 rent. BFSL have provided loan note finance to the Enlarged Group and received interest and arrangement fee payments totalling £0.4m.

Risk Factors

The principal risks and uncertainties affecting the business activities of the Enlarged Group were identified under the heading "Risk management and principal risks" in the Strategic Report on pages 7 and 8 of the 2014 Annual Report, a copy of which is available on the Company's website www.arktherapeutics.com. In the view of the Board, the key risks and uncertainties for the remaining six months of the financial year continue to be those set out in the 2014 Annual Report.

Outlook

The pet care market outlook remains positive. The Board remains confident in the Enlarged Group's prospects for the remainder of the year and that trading will be in line with expectations. In particular, revenues from Pet Care Plan covering pets in the rest of Europe will be generated for the first time in the second half of the year through a combination of activities:

· During the remainder of 2015 and 2016 PVA expects to commence the roll out of PVA's Pet Care Plan in the Nordic region pursuant to an agreement with the largest and fastest growing Nordic operator of companion animal hospitals and veterinary clinics.

· Through its own initiatives PVA has launched Pet Care Plan in the Netherlands and the Republic of Ireland. Agreements have been entered into with 29 third party clinics and Pet Care Plan is already providing benefits to pets and their owners in these countries.

A significant investment will be required in connection with these European expansion plans that will have an impact on the Enlarged Group's profitability.

Board and Management

On 27 February 2015, Dominic Tonner, Daniel Smith and Raj Uppal were appointed as Executive Directors of the Company in the roles of Chief Executive Officer, Chief Financial Officer and Corporate Development Director respectively. At the same time, Dr David Venables and Dr Bloxham resigned as Directors, as did Sue Steven, although Sue continues in her role as Company Secretary.

On 9 March 2015 Graham Dick BVSc, MRCVS was appointed to the Board as a Non-Executive Director. It is the Company's intention to appoint a further Non-Executive Director in due course.

Going concern

Following the Disposal in the prior year the Company ceased its principal activity. During the reporting period the Company continued in operational existence for the purpose of entering into a reverse transaction or, if that transaction had been unsuccessful, to distribute funds back to shareholders. As required by IAS 1 Presentation of Financial Statements, the Directors had prepared the financial statements for the prior year on a basis other than that of a going concern given that its principal activity had ceased during that year. The financial statements did not include any provision for the future cost of terminating the business of the Company except to the extent that such were committed at the balance sheet date. No material adjustments arose as a result of ceasing to apply the going concern basis.

Prior to the year end, the Company commenced the process by which it would complete a reverse acquisition with PVGL. Following the successful completion of the reverse acquisition, the issue of £1.2m share capital and commencement of trading, after making enquiries, the Directors have a reasonable expectation that, as indicated by the detailed financial forecasts of the Enlarged Group (which take into account the risks facing the Enlarged Group), the Enlarged Group will have adequate resources to continue in operational existence for the foreseeable future. For this reason, the financial statements have been prepared on a going concern basis.

By order of the Board

Responsibility statement

We confirm to the best of our knowledge that:

• the condensed set of financial statements has been prepared in accordance with IAS34 Interim Financial Reporting as adopted by the EU;

• the interim management report includes a fair review of the information required by:

(a) DTR 4.2.7.R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b) DTR 4.2.8.R of the Disclosure and Transparency Rules, being 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 could do so.

For and on behalf of the Board:

Condensed consolidated statement of comprehensive income

For the six months ended 31 March 2015 (unaudited)

Condensed consolidated statement of financial position

As at 31 March 2015 (unaudited)

Condensed consolidated statement of changes in equity

For the six months ended 31 March 2015 (unaudited)

Condensed consolidated statement of cash flows

For the six months ended 31 March 2015 (unaudited)

Notes to the financial information

1 General information

This interim financial information was authorised for issue on 29 May 2015. The information for the year ended 31 March 2015 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. They represent a continuation of PVG 2007 group financial results in accordance with the reverse acquisition accounting policy described below. A copy of the PVG 2007 statutory accounts for the year ended 30 September has been delivered to the Registrar of Companies.

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 financial statements have been prepared on the historical cost basis. The principal accounting policies adopted are set out below.

The first time IFRS adoption reconciliations can be found in the Prospectus released on 27 February 2015.

Basis of preparation

The annual financial statements of Premier Veterinary Group plc were prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. The condensed set of financial statements included in this half-yearly report has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting', as adopted by the European Union.

At 31 March 2015, the Company had net assets/(liabilities) of £0.3m (31 March 2014: (£0.7m)) and cash and cash equivalents of £1.0m (31 March 2014: £1.5m).

On 5 February 2015, Premier Veterinary Group plc (formerly Ark Therapeutics plc) agreed to pay cash of £3,731.18 to acquire 100% of the issued share capital in PVG 2007 Limited (formerly Premier Veterinary Group Limited).

This transaction falls outside the scope of IFRS 3 ("Business Combinations"), as it is a reverse acquisition into a listed shell, but the Group has adopted certain of the requirements of IFRS 3 in accounting for the reverse acquisition. The accounting policy adopted has been set out below. Immediately prior to the reverse acquisition the Company was deemed to be a cash shell and as such was not classified as a business under IFRS 3 Business Combinations and therefore the acquisition is outside the scope of IFRS 3. As such, in accordance with the Listing Rules LR 5.6.4, and by virtue of the relative size of PVG when compared to the Company, the accounting acquirer has been determined to be PVG 2007 Limited and the accounting acquiree, the Company.

The consolidated financial statements are presented as a continuation of the financial statements of the private operating entity, PVG 2007. The consideration transferred has been measured at fair value and has been calculated as the value of the shares acquired. The assets and liabilities of PVG plc have been recognised at fair value at the acquisition date. There was no surplus in the consideration transferred over the fair value of the net identifiable assets of Premier Veterinary Group plc arising on the acquisition. All other transaction costs have been recognised as expenditure.

The share capital and share premium at the period end represent the equity structure of the legal parent including the equity instruments issued by the legal parent to effect the transaction. This has been effected by the creation of another reserve to reflect the reverse acquisition.

Seasonal changes to the Group's operations are not material. 

Going concern

Following the Disposal in the prior year the Company ceased its principal activity. During the reporting period the Company continued in operational existence for the purpose of entering into a reverse transaction or, if that transaction had been unsuccessful, to distribute funds back to shareholders. As required by IAS 1 Presentation of Financial Statements, the Directors had prepared the financial statements for the prior year on a basis other than that of a going concern given that its principal activity had ceased during that year. The financial statements did not include any provision for the future cost of terminating the business of the Company except to the extent that such were committed at the balance sheet date. No material adjustments arose as a result of ceasing to apply the going concern basis.

Prior to the year end, the Company commenced the process by which it would complete a reverse acquisition with PVGL. Following the successful completion of the reverse acquisition, the issue of £1.2m share capital and commencement of trading, after making enquiries, the Directors have a reasonable expectation that, as indicated by the detailed financial forecasts of the Enlarged Group (which take into account the risks facing the Enlarged Group), the Enlarged Group will have adequate resources to continue in operational existence for the foreseeable future. For this reason, the financial statements have been prepared on a going concern basis.

Basis of consolidation

The condensed financial statements consolidate those of the parent company and all of its subsidiaries as of 31 March 2015.

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 PVG Group is measured at the fair value of the consideration received or receivable. The PVG 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 PVG Group has the following two income streams:

Vets business

· Veterinary services: Revenue is recognised at the point of delivery of service.

PVA

· Pet care plan: Fees received for the collection and management of direct debits on behalf of veterinary practices external to the Group are recognised on a received basis. A flat fee is received for every direct debit collected;

· Buying group: Fees are recognised once there is a legal entitlement to receive.

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.

Taxation

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company's liability for current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred taxation

Deferred tax assets and liabilities are recognised where the carrying amount of an asset or liability in the consolidated statement of financial position differs from its tax base, except for differences arising on:

· the initial recognition of goodwill;

· the initial recognition of an asset or liability in a transaction which is not a business combination and at the time of the transaction affects neither accounting or taxable profit; and

· investments in subsidiaries and jointly controlled entities where the PVG Group is able to control the timing of the reversal of the difference and it is probable that the difference will not reverse in the foreseeable future.

Recognition of deferred tax assets is restricted to those instances where it is probable that taxable profit will be available against which the difference can be utilised.

The amount of the asset or liability is determined using tax rates and laws that have been enacted or substantively enacted by the statement of financial position date and are expected to apply when the deferred tax liabilities or assets are settled or recovered. Deferred tax balances are not discounted.

Deferred tax assets and liabilities are offset when the PVG Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

· the same taxable group company; or

· different company entities which intend either to settle current tax assets and liabilities on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets and liabilities are expected to be settled or recovered.

Goodwill

Typically, except for customer lists, which are recognised as externally acquired intangible assets, goodwill represents the synergies and additional buying power that the PVG Group has as a result of the acquisition. Goodwill is capitalised as an intangible asset and is tested for impairment annually or when an indication of impairment exists. Any impairment in carrying value (calculated by reference to the difference between carrying value and recoverable amount) is charged to the consolidated statement of comprehensive income within 'Administrative expenses'.

Externally acquired intangible assets

Externally acquired intangible assets acquired as part of a business combination are initially recognised at fair value and subsequently amortised on a straight line basis over their useful economic lives. The significant intangibles recognised by the PVG Group and their useful economic lives acquired in a business combination are as follows:

Customer lists - between 3 - 6 years straight line

The amortisation expense is recognised within 'Administrative expenses' in the consolidated statement of comprehensive income.

Property, plant and equipment ("PPE")

Items of PPE are initially recognised at cost. As well as the purchase price, cost includes directly attributable costs.

Depreciation is provided on all items of PPE so as to write off their carrying value over the expected useful economic lives. It is provided at the following rates:

Impairment of non-financial assets

Intangible and other non-financial assets with indefinite useful economic lives are subject to impairment tests annually at the financial year end. The carrying values of non-financial assets are reviewed for impairment when there is an indication that assets might be impaired. When the carrying value of an asset exceeds its recoverable amount, the asset is written down accordingly.

Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset's cash generating unit (i.e. the smallest group of assets in which the asset belongs for which there are separately identifiable cash flows).

Impairment charges are included in the consolidated statement of comprehensive income, except to the extent they reverse previous gains recognised in the consolidated statement of comprehensive income. An impairment loss recognised for goodwill is not reversed.

Inventories

Inventories are initially recognised at cost, and subsequently at the lower of the cost and net realisable value. Costs are assigned using the 'first in - first out' cost formula. Cost comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Post-retirement benefits

The PVG Group operates a defined contribution pension scheme and the pension charge represents the amounts payable by the PVG Group to the fund and into personal arrangements in respect of the period.

Employee Benefit Trust

The Company operates an employee benefit trust (the Ark Therapeutics Family Benefit Trust ("FBT")) as part of its incentive plans for employees. All assets and liabilities within the Trust are recorded in the balance sheet as assets and liabilities of Premier Veterinary Group plc (formerly Ark Therapeutics Group plc) until such time as the assets are awarded to the beneficiaries. All income and expenditure of the Trust is similarly brought into the results of the Company.

The PVG Group classifies its financial assets into the categories, discussed below, due to the purpose for which the asset was acquired. The PVG Group has not classified any of its financial assets as held to maturity, available for sale or held at fair value through profit and loss.

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.

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 PVG 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.

The PVG Group's loans and receivables comprise 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.

The PVG 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 any of 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.

· Loan notes (including convertible debt) which are initially recognised at fair value net any of 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.

· 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 added to the carrying amount of the liability to the extent that they are not settled in the period in which they arise.

Financial instruments issued by the PVG Group are treated as equity only to the extent that they do not meet the definition of a financial liability. The PVG Group's ordinary shares are classified as equity instruments.

Where substantially all of the risks and rewards incidental to ownership are not transferred to the PVG 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 PVG Group. In accordance with IAS17, 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 PVG Group's general policy on borrowing costs.

Share-based payments

The cost of equity-settled transactions is measured by reference to the fair value 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 employees become fully entitled to the award. Fair value is determined by using an appropriate pricing model. No account is taken of any vesting conditions other than conditions linked to the price of shares 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 balance sheet date is recognised in the profit and loss account with a corresponding entry in the statement of financial position.

Management have considered any charge, in relation to share based payments, to the statement of total comprehensive income during the reporting period to be immaterial.

Investments in subsidiaries

Investments in subsidiaries are stated at cost less, where appropriate, provisions for impairment.

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, Chief Financial Officer and Corporate Development Director.

Management review revenue and cost of sales of two separate operating segments against budget. The remaining costs, including administrative costs and finance expenses, are reviewed in total. Assets and liabilities of the PVG Group are not allocated to an operating segment.

Loss from discontinued operations

A discontinued operation is a component of the Group that either has been disposed of, or is classified as held for sale. Profit or loss from discontinued operations comprises the post-tax profit or loss of discontinued operations and the post-tax gain or loss resulting from the measurement and disposal of assets classified as held for sale

Critical accounting estimates and judgements

The PVGGroup makes certainestimates and assumptions regarding the future.Estimates and judgements are continually evaluated based on historical experience and other factors, including the expectations of futureevents that are believedto be reasonable under the circumstances. In the future,actual experience may differfrom these estimates and assumptions. The estimates and assumptions that have a significant risk of causing a material adjustment to thecarrying amounts of assets andliabilities within thenext financial year are discussed below.

(a) Carrying value of goodwill

Goodwill resulting from a business combination is capitalised and tested annually for impairment. Both initial valuations and valuations for subsequent impairment tests are based on risk adjusted future cash flows discounted using appropriate discount rates. These future cash flows will be based on forecasts which are inherently judgemental. Future events could cause the assumptions to change which could have an adverse effect on the future results of the PVG Group. The estimated cash flows and future growth rates are based on past experience and knowledge of the sector, the value in use is most sensitive to changes in the growth rate and discount rate.

(b) Measurement and recoverability of customer lists

Upon business combinations, previously unrecognised intangible assets are required to be measured. The valuation of such customer lists has been based on expected attrition rates of customers based on historical performance and in comparison to previous business combinations. Forecast attrition rates are inherently judgemental.

(c) PPE

Property, plant and equipment is depreciated 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 PVG Group.

(d) Fair value of consideration on reverse acquisition

Premier Veterinary Group plc ("the Company") acquired the entire issued share capital of PVG 2007 Limited on 5 February 2015 for a total cash consideration of £3,731.18. Therefore, the fair value of the consideration was estimated to be equal to the total cash consideration of £3,731.18.

3 Acquisitions and disposals

Premier Veterinary Group plc ("the Company") acquired the entire issued share capital of PVG 2007 Limited on 5 February 2015 for a total cash consideration of £3,731.18. PVG 2007 Limited operates primarily in the UK small animal veterinary services sector but certain of its operations cross over into the wider UK small animal pet care market.

This transaction falls outside the scope of IFRS 3 ("Business Combinations"), as it is a reverse acquisition into a listed shell, but the Group has adopted certain of the requirements of IFRS 3 in accounting for the reverse acquisition. The accounting policy adopted has been set out below. Immediately prior to the reverse acquisition the company was deemed to be a cash shell and as such was not classified as a business under IFRS 3 Business Combinations and therefore the acquisition is outside the scope of IFRS 3. As such, in accordance with the Listing Rules LR 5.6.4, and by virtue of the relative size of PVG when compared to the Company, the accounting acquirer has been determined to be PVG 2007 Limited and the accounting acquiree, the Company.

The details of the financial assets and liabilities of the accounting acquiree are as follows;

There is no difference between the fair value and the carrying amount of the assets and liabilities at the date of reverse acquisition.

4 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, incorporating the reorganisation of share capital set out in note 7 as if it had taken effect on 1 October 2013.

From continuing and discontinued operations

The calculation of the basic and diluted earnings per share is based on the following data:

5 Segmental reporting

As defined under International Financial Reporting Standard 8 (IFRS 8) management have defined that the Group's Management currently identifies the PVG Group's two divisions as operating segments as this is the basis on which results are considered by key management personnel. 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 two divisions are categorised as follows:

· Vets business - day to day running of veterinary practices.

· PVA - fees generated from external veterinary practices and other third party customers.

All revenue is derived from external customers.

6 Goodwill

Movements in the carrying amount of goodwill are as follows

7 Share capital

On 11 December 2014 the Company's share capital was reorganised by a special resolution to create ordinary shares with a nominal value of 10 pence each and a deferred share of 90 pence.

On 27 February 2015 11,859,007 new shares were issued for cash corresponding to 85.0% of total shares in issue. Each ordinary share has the same right to receive dividends and the repayment of capital and represents one vote at the shareholder meetings of PVG plc.

8 Share-based payments - equity-settled share option schemes, LTIPs

Options over ordinary shares were granted on 27 February 2015 under the 2014 Ark Therapeutics Group plc Enterprise Management Incentive Share Option Plan.

Grants under share options exercisable one year from the date of grant.

Options under the share option scheme were granted at the subscription price of 10.1 pence.

All existing options which had been granted prior to the start of the period were waived on 26 January 2015.

A warrant agreement dated 21 November 2014 granting, conditional only on Admission, WG Partners LLP warrants over two per cent. of the Enlarged Issued Share Capital to subscribe for new Ordinary Shares (the "WG Warrants") on the following terms:

(i) one per cent. of the WG Warrants will be exercisable 12 months after Admission at an exercise price equivalent to the Subscription Price; and

(ii) the remaining one per cent. of the WG Warrants will be exercisable 24 months after Admission at a 25 per cent. premium to the Subscription Price.

Options and Warrants Outstanding

Options and Warrants exercisable

The fair value of share options expense recognised in the period is determined using the Black-Scholes model which takes into account the terms and conditions upon which the shares were awarded. The Company recognised a charge £2,400 (2014: £nil) in relation to share based payment.

9 Related party transactions

The Company provided loans to the Ark Therapeutics Group plc Family Benefit Trust ("FBT") for the purchase of shares in the Company. No interest was charged on these loans. Details of interest income for the year and outstanding balances at year end are shown below:

As at 31 March 2015, by virtue of his shareholding Raj Uppal is considered to be the controlling party of the Group.

Bybrook Financial Solutions Limited ("BFSL") and Bybrook 2014 Limited ("BY2014") are considered to be a related party due to being under common control of Raj Uppal.

PVG 2007 Limited was a tenant in a property owned by BY2014. BFSL have provided loan note finance to the group and received interest payments as follows:

10 Reconciliation on conversion to IFRS

Independent review report to the members of Premier Veterinary Group plc

Introduction

We have reviewed the condensed set of financial statements in the half-yearly financial report of Premier Veterinary Group plc for the six months ended 31 March 2015 which comprises condensed consolidated statement of comprehensive income, condensed consolidated statement of financial position, condensed consolidated statement of changes in equity, condensed consolidated statement of cash flows, and notes 1-10.

We have read the other information contained in the half yearly financial report which comprises only the interim management report and the responsibility statement and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the Company's members, as a body, in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information performed by the Independent Auditor of the Entity'. Our review work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our review work, for this report, or for the conclusion we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity'. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2015 is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

GRANT THORNTON UK LLP

Chartered accountants and statutory auditor

BRISTOL

29 May 2015