PVG.L Regulatory News (PVG)

PREMIER VETERINARY GROUP PLC

("PVG", the "Company")

London, UK, 15 June 2018 - Premier Veterinary Group plc ("PVG" or the "Company") today announces its unaudited interim results for the six months ended 31 March 2018.

HIGHLIGHTS

· 32% 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 212,000 (31 March 2017: 161,000).

· Revenues increasing in all territories

· Loss after tax from continuing operations to 31 March 2018 £1.94m (31 March 2017: £2.07m).

· Cash and short term deposits of £1.10m as at 31 March 2018 (at 31 March 2017: £0.71m).

· Cash outflow from continuing operations for six months to 31 March 2018 of £1.98m (6 months ended 31 March 2017: £2.09m).

Post period events

· Additional £750,000 of unsecured loan notes made available by Bybrook Finance Solutions Limited increasing total committed facility to £2.25million. First £0.5m tranche of facility drawn on 1 June 2018 as planned.

Dominic Tonner, CEO of PVG commented:

"PVG has continued to make significant investments across all its geographical territories to ensure that it remains at the forefront in working with veterinary practices to deliver preventative healthcare programmes for pets. Solid progress has been made in number of pets on plan across the UK and Europe during the first six months of the financial year and this progress has continued in April and May. Whilst the improvements in growth in the US are encouraging, the current number of pets on plan is not at levels previously expected. We are continuing to explore options that will enable the Group to capitalise on the investment that has already been made in the US whilst at the same time reducing the continuing cash burn in this territory."

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014.

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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 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 and is available only through veterinary practices. The programme facilitates gold standard care for pets at an affordable price for the pet owner, by way of fixed monthly payments.

In the comparative six month period ended 31 March 2017, PVA operated a buying group "Premier Buying Group" (the "PBG") in the UK and Ireland, which offered enhanced discounts to member practices on pharmaceutical and consumable spending. The PBG was sold on 30 April 2017, and the results of the PBG are treated as discontinued in the comparative period of this IMR.

In these results, references to "continuing" operations are in relation to the PPCP business.

Overview and strategic update

As stated in the Annual Report and Accounts for the year ended 30 September 2017 (the "2017 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;

· continued investment 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. Over the last 6 months, the Group has grown its PPCP businesses in all regions and the management team continues to explore opportunities to accelerate growth. The number of clinics and hospitals contracted to sell preventative health programmes continues to increase.

Regional review

UK

In the UK, the number of pets on plan has increased by 25% to 171,000 as at 31 March 2018 (31 March 2017: 137,000). The pipeline of opportunities to sign new clinics on to PPCP remains strong and the ongoing rate of growth in this well-established market is encouraging. The anticipated increase in revenues from veterinary clinics relating to the continued growth in pets on plan may be partly offset from an expected reduction in revenues from other third parties.

Resources have been added to our UK training team, as well as to the IT department to ensure the business delivers enhanced levels of customer support and experience.

Europe

The number of pets on plan in Europe has increased by 59% to 35,000 (31 March 2017: 22,000).

The Group's most significant territory in Europe is the Netherlands which remains on course to become profitable in the financial year ending 30 September 2018. The number of pets on plan has grown by 45% to 29,000 as at 31 March 2018 (31 March 2017: 20,000). As a result of organic growth and the small acquisition in September 2017, PVG will have approximately 20% market share of small animal clinics in the Netherlands. The Group is implementing different service offerings to widen the appeal of PPCP to other segments of the Dutch veterinarian market.

In France, at 31 March 2018, there were 4,000 pets on plan (31 March 2017: Nil). 108 clinics have contracted to launch and 60 of these have been launched at this stage. There is a strong pipeline of further opportunities.

US

Early in this financial year, the Group took the decision to focus its US resources in the mid-west and south-eastern states, in order to maximise growth in revenues from its available cash resources.

The number of pets on plan has increased to 6,000 (31 March 2017: 2,000). The growth in pets on plan is not at the levels that have been experienced in other territories which has been caused by differences in the US markets which have previously been reported.

The net growth in pets on plan, being new pets signed up less pets cancelled, is starting to improve following the most recent technological enhancements implemented in January 2018, which have halved the number of plans being cancelled where the pet owner payment collection has failed. This enhancement has been well received and there are signs that over the last three months, compared to the previous three months, the sign up rate is improving. Whilst the improvements in growth are encouraging the current number of pets on plan is not at levels previously expected.

We are continuing to explore options that will enable the Group to capitalise on the investment that has already been made in the US whilst at the same time reducing the continuing cash burn in this territory.

Financial and non-financial key performance indicators ("KPIs")

As set out in the 2017 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 2018 for the continuing business, excluding Premier Buying Group, 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 direct debits processed under PPCP.

PPCP fees are generated from the collection and management of direct debits on behalf of veterinary practices external to the Group and are recognised on a receipts basis. A flat fee is received for every direct debit collected.

PVA's revenues for the continuing business for the six months ended 31 March 2018 increased by 33% to £1.54m (31 March 2017: £1.16m). These revenues arise entirely from the PPCP business in the UK, Europe and the US.

The total number of direct debits processed increased to 1,226,000 in the six month period to 31 March 2018 (31 March 2017: 937,000), an increase of 31%.

Number of member clinics

Management recognises the value of its relationships with clinics and monitors the number of member clinics as a KPI. This is tracked and reviewed in each territory on a monthly basis. Management has concluded that shareholder value will be derived from this KPI and recognises the need to achieve growth in this KPI within a cost-base suited to the business. An individual customer (or practice) may operate a number of clinics.

At 31 March 2018, the number of PPCP member clinics in each region was:

Pets on Plan

Whilst clinic relationships indicate the future growth potential for the Group, it is also important to monitor the number of pets on plan as this is the key revenue driver. This KPI enables management to ensure member clinics are achieving the levels of penetration that are expected and to focus attention on clinics 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.

Overall, the number of pets administered by PPCP has increased by 32% to 212,000 as at 31 March 2018 (31 March 2017: 161,000). In the UK, the number of pets on plan has increased by 25% to 171,000 as at 31 March 2018 (31 March 2017: 137,000). The number of pets on plan in Europe has increased by 59% to 35,000 (31 March 2017: 22,000).

In the US the number of pets on plan has increased by 200% to 6,000 (31 March 2017: 2,000).

Cash processed through the platform

Member clinic numbers and pets on plan are internal points 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 2018 compared to the same period last year.

Results for the six months ended 31 March 2018

The Group's total continuing revenues increased by 33% to £1.54m for the six months ended 31 March 2018 (£1.16m six months ended 31 March 2017). The operating loss for the six months ended 31 March 2018 was £1.94m (31 March 2017: £2.07m).

The table below shows the performance of the continuing business between the UK and overseas:

The UK business has generated a 17% growth in revenue. In the second half of last year resources were added to our customer facing resources and business system team to deliver the right level of customer experience in our key market, and to improve technical competitive advantage. This investment has increased the cost base in the first half of this year by £0.15m in comparison to the same period last year and consequently operating profit in the UK has remained in line with the same period last year.

In Europe, the Group has invested an additional £0.2m in people and other business development expenditure in comparison to the same period last year. This investment in PPCP in the region has generated strong revenue growth of 59%.

Following the decision to focus its US resources in the mid-west and south-eastern states, the operating costs in the US have been reduced. The operating cost reduction coupled with £0.1m increase in revenues has reduced the operating loss in the territory from £0.89m to £0.76m. The impact of the cost reduction in the US will be more significant in the second half of the financial year ending 30 September 2018 compared to the second half of the financial year ended 30 September 2017.

At 31 March 2018, the staff headcount was 56 (31 March 2017: 57).

Central unallocated costs are broadly in line with the same period last year.

The share-based compensation charge for both periods was £Nil.

Interest charges were £31k (2017: £67k) and relate solely to the commitment fee on the unsecured loan note facility that was entered into in November 2017.

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, taking into account any earnings, of which there can be no assurance, to be reinvested in the Group's business.

Financial position

Net assets were £1.18m at 31 March 2018 (31 March 2017: net liabilities £0.62m).

Cash and short-term deposits were £1.10m as at 31 March 2018 (at 31 March 2017: £0.71m). The Group had net cash at 31 March 2018 of £1.10m (at 31 March 2017: net borrowings of £0.54m).

Cash flow

Net cash outflow from continuing operating activities for the six months ended 31 March 2018 was £1.98m (six months ended 31 March 2017: £2.09m).

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

The committed facility of £1.5m provided to PVG by Bybrook Finance Solutions Limited ("BFSL") on 27 November 2017 has today been increased to £2.25m on terms similar to those previously agreed other than once drawn each tranche will attract interest for the full term of the loan and the loan becomes repayable in the event that the Company raises finance through the issue of shares. The first tranche of £0.5m was drawn on 1 June 2018 with remaining tranches totalling £1.75m available for drawdown between 1 September 2018 and 1 August 2019. The facility attracts a monthly charge of 0.5% on any amounts committed which increases to 1% per month for any amounts drawn. This arrangement provides PVG with security of funding whilst at the same time being sufficiently flexible to continue to consider alternative sources of funding. Rajan Uppal, a director of PVG, is the sole shareholder and director of BFSL.

Board changes and Board composition

Graham Dick BVSc MRCVS accepted the role of Non-Executive Chairman of PVG with effect from 1 March 2018 and has been a non-executive director of the Company since March 2015.

Juliet Thompson stepped down as Chairman and as a director of PVG effective from 28 February 2018. Iain Ross resigned from his position as a Non-Executive Director of the Company, with effect from 16 October 2017, due to additional board responsibilities elsewhere. The Board of Directors thanks Juliet and Iain for their services to the Company and wish them all the best for their future endeavours.

With Juliet Thompson stepping down, Graham remains the only non-executive director on the board of PVG. The board is assessing PVG's requirements with regards to the appointment of one or more independent non-executive directors. Until such appointment is made, Rajan Uppal will continue to be a member of the Audit, Remuneration and Nomination Committees as advised in the Company's 2017 Annual Report.

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 risks" in the Strategic Report on pages 14 to 17 of the 2017 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

· Brand Reputation

· Litigation and consequent impact on reputation

· New Initiatives and failure to expand the pet healthcare services

· PVA's status as a Direct Debit originator being revoked

· Information security and data protection

· Attraction and retention of key employees

· Continuity of operations

· Management of growth and expansion

· International expansion risk

· Financial Liquidity Risk

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 2017 Annual Report. In particular the Market competition risk is impacted by the increasing levels of corporate consolidation within veterinary practices which is changing the dynamics of the pharmaceutical product supply chain. This is placing increased pressure on margins for Manufacturers.

These changes present both challenges and opportunities to the Group. Customer retention can be impacted by corporate acquisitions and there is ongoing pressure on pricing. However, the Group also benefits by supporting its corporate customers who are acquiring new practices. In addition, the changes in the industry provide opportunities for the Group to offer solutions to its customers to address these pressures but may result in less support from third parties.

Going concern

As stated in note 2 to the condensed financial statements, The Group made a loss from continuing operations for the period of £1.9m (6 months ended 31 March 2017: £2.1m) and had net assets of £1.2m (31 March 2017: net liabilities of £0.1m). The Group had cash balances of £1.1m (2017: £0.7m).

As explained above, PVG has drawn the first £0.5m tranche of loan notes on 1 June 2018 and has access to a further £1.75m in unsecured loan notes available to be drawn down in tranches from 1 September 2018 to 1 August 2019 from BFSL.

The directors consider that with its current cash reserves and the additional funds available from the committed funding facility, the Group has sufficient resources to meet all current liabilities as they fall due. This takes into consideration current market conditions, the Group's financial position and the Group's forecasts and projections, which include mitigations within the control of the group. After allowing for reasonable possible changes in trading performance and mitigating actions (including cost cutting measures and withdrawal from loss making territories), 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. For these reasons, the directors continue to adopt the going concern basis in preparing the financial statements.

Outlook

Continued growth in the number of pets on plan across all geographical territories is expected.

The UK business is expected to remain profitable and our business in the Netherlands is expected to become profitable by the end of this financial year. The business in France is showing real potential.

Whilst the growth in the US market continues to be slower than previously anticipated, the Group has made significant investment and addressed a number of the challenges that have been faced in the market.

Our employees are one of our key strengths, and I am delighted that we have been able to attract and retain such high calibre staff both in the UK and in our overseas operations to enable us to deliver our ongoing expansion strategy.

We look forward to announcing future developments in due course.

RESPONSIBILITY STATEMENT

For the six months ended 31 March 2018, 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,

Condensed consolidated statement of comprehensive income

For the six months ended 31 March 2018 (unaudited)

Condensed consolidated statement of comprehensive income

For the six months ended 31 March 2018 (unaudited)

Condensed consolidated statement of financial position

As at 31 March 2018 (unaudited)

Condensed consolidated statement of changes in equity

For the six months ended 31 March 2018 (unaudited)

Condensed consolidated statement of cash flows

For the six months ended 31 March 2018 (unaudited)

Notes to the financial information

1 General information

This interim financial information was authorised for issue on 14 June 2018. The information for the period ended 31 March 2018 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 financial 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 2018 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 2017, 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 2017 were approved by the Board of Directors on 27 November 2017. 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 2017.

Going concern

The Group made a loss from continuing operations for the period of £1.9m (6 months ended 31 March 2017: £2.1m) and had net assets of £1.2m (31 March 2017: net liabilities of £0.1m). The Group had cash balances of £1.1m (2017: £0.7m). Cash used in continuing operations for six months to 31 March 2018 was £1.98m (6 months ended 31 March 2017: £2.09m).

The committed facility of £1.5m provided to PVG by Bybrook Finance Solutions Limited on 27 November 2017 has been increased to £2.25m on terms similar to those previously agreed other than once drawn each tranche will attract interest for the full term of the loan. The first tranche of £0.5m was drawn on 1 June 2018 with remaining tranches totalling £1.75m available for draw down between 1 September 2018 and 1 August 2019. The facility attracts a monthly charge of 0.5% on any amounts committed which increases to 1% per month for any amounts drawn. This arrangement provides PVG with security of funding whilst at the same time being sufficiently flexible to continue to consider alternative sources of funding. Rajan Uppal, a director of PVG, is the sole shareholder and director of BFSL.

The directors consider that with its current cash reserves and the additional funds available from the committed funding facility, the Group has sufficient resources to meet all current liabilities as they fall due. This takes into consideration current market conditions, the Group's financial position and the Group's forecasts and projections, which include mitigations within the control of the group. After allowing for reasonable possible changes in trading performance and mitigating actions (including cost cutting measures and withdrawal from loss making territories), 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. For these reasons, the directors continue to adopt the going concern basis in preparing the financial statements.

Basis of consolidation

The condensed consolidated financial statements consolidate those of the parent company and all of its subsidiaries as of 31 March 2018.

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 had the following income stream:

· Premier Pet Care Plan ("PPCP"): Fees received for the collection and management of direct debits and related services are recognised on a receipts basis. A flat fee is received for every direct debit collected. An admin fee for setting up each member practice is charged.

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.

The Group classifies its financial assets into the categories, discussed below, due to the purpose for which the asset was acquired. 

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.

The Group classifies its financial liabilities as other financial liabilities which include the following:

· 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 expensed up front when the re-arrangement is a substantial modification. 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 through profit and loss financial instrument. The fair value of the instrument is recognised on the statement of financial position with gains and losses through the income statement. No hedge accounting is applied.

Certain of the disclosures about fair value of financial instruments include the classification of fair values within a three-level hierarchy. The three levels are defined based on the observably of significant 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.

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.

Share-based payments

The cost of equity-se-ttled 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 party become fully entitled to the award. Fair value is determined by using the Black-Scholes 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 period end date is recognised in the income statement with a corresponding entry in the statement of financial position.

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 two 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.

Non-current assets held for sale and disposal groups

Non-current assets and disposal groups are classified as held for sale when:

· they are available for immediate sale;

· management is committed to a plan to sell;

· it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn;

· an active programme to locate a buyer has been initiated;

· the asset or disposal group is being marketed at a reasonable price in relation to its fair value; and,

· a sale is expected to complete within 12 months from the date of classification.

Non-current assets and disposal groups classified as held for sale are measured at the lower of:

· their carrying amount immediately prior to being classified as held for sale in accordance with the group's accounting policy; and,

· fair value less costs of disposal.

Following their classification as held for sale, non-current assets (including those in a disposal group) are not depreciated.

The results of operations disposed during the year are included in the consolidated statement of comprehensive income up to the date of disposal.

Profit or 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 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. The 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 are discussed below.

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.

From continuing and discontinued operations

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

4 Segmental reporting

Management have defined operating segments as those on which results are considered by the Chief Executive Officer. 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.

5 Share capital

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

No options have been granted in the period ended 31 March 2018. In the comparative period ended 31 March 2017, options over ordinary shares were granted on 3 March 2017 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 238.75 pence per share.

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.

Options and warrants outstanding

Options 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 £Nil (2016: £NIL) in relation to share based payment.

7 Related party transactions

The Group operates the Ark Therapeutics Group plc Family Benefit Trust ("FBT"). Amounts due from the FBT were £Nil (31 March 2017: £NIL, 30 September 2017: £Nil).

Bybrook Finance Solutions Limited ("BFSL") is under control of a director of the Company, Rajan Uppal. On 27 November 2017, PVG entered into an arrangement with BFSL whereby BFSL agreed to provide £1.5m in unsecured loan notes. On 14 June 2018 the arrangement was amended to provide for the total facility to be increased to £2.25m on terms similar to those previously agreed other than once drawn each tranche will attract interest for the full term of the loan and the loan becomes repayable in the event that the Company raises finance through the issue of shares. The first tranche of £0.5m was drawn on 1 June 2018 with remaining tranches totalling £1.75m available for draw down on specified dates between 1 September 2018 and 1 August 2019. PVG has the right to cancel the commitment at any time before drawdown without penalty. Any amounts drawn down are repayable after two years from the date of draw down or in the event of an equity raise if earlier. The facility attracts a monthly charge of 0.5% on any amounts committed which increases to 1% per month for any amounts drawn. At 31 March 2018, the outstanding commitment was £1.5m as no amounts had yet been drawn. Commitment fees charged during the period were £30,750. Interest charged by BFSL in the comparative period to 31 March 2017 was £7,000.

Independent review report to Premier Veterinary Group plc

Report on the condensed consolidated financial statements

Our conclusion

We have reviewed Premier Veterinary Group plc's condensed consolidated financial statements (the "interim financial statements") in the interim review of Premier Veterinary Group plc for the 6 month period ended 31 March 2018. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are 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 Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

· the condensed consolidated statement of financial position as at 31 March 2018;

· the condensed consolidated statement of comprehensive income for the period then ended;

· the condensed consolidated statement of cash flows for the period then ended;

· the condensed consolidated statement of changes in equity for the period then ended; and

· the explanatory notes to the interim financial statements.

The interim financial statements included in the interim review have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

As disclosed in note 2 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The interim review, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim review in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the interim review based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What a review of interim financial statements involves

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' issued by the Auditing Practices Board for use in the United Kingdom. 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, 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.

We have read the other information contained in the interim review and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers LLP

Chartered Accountants

Bristol

14 June 2018