Interim results presentation - Half year ended 31 March 2017 1
DISCLAIMER For the purposes of this notice, "presentation" means this document, its contents or any part of it, any oral presentation, any question or answer session and any written or oral material discussed or distributed during the presentation. This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any securities in the Company, nor shall any part of it nor the fact of its distribution form part of or be relied on in connection with any contract or investment decision relating thereto, nor does it constitute a recommendation regarding the securities of the Company. The information and opinions contained in this presentation are provided as at the date of this presentation and are subject to change without notice. In furnishing this presentation, the Company does not undertake or agree to any obligation to provide you with access to any additional information or to update this presentation or to correct any inaccuracies in, or omissions from, this presentation that may become apparent. You should make your own independent evaluation of the Company and should make such other investigations as you deem necessary. No representation or warranty, express or implied, is given by or on behalf of the Company its directors, officers or employees or any other person as to the accuracy or completeness of the information or opinions contained in this presentation and no liability whatsoever is accepted by the Company or any of its members, directors, officers or employees nor any other person for any loss howsoever arising, directly or indirectly, from any use of such information or opinions or otherwise arising in connection therewith. Certain statements, beliefs and opinions in this presentation are "forward-looking statements". These statements reflect the Company's, or as appropriate, the Company's directors' current expectations and projections about future events. Such forward-looking statements involve risks, uncertainties and other important factors beyond the Group’s control that could cause the actual results, performance or achievements of the Group to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the Group’s present and future business strategies and the environment in which the Group will operate in the future. Forward-looking statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. These forward-looking statements speak only as of their date and the Group and its directors, officers, employees, agents, affiliates and advisers expressly disclaims any obligation or undertaking to supplement, amend, update or revise any of the forward-looking statements contained in this presentation to reflect any change in the Group’s expectations with regard thereto or any change in events, conditions or circumstances on which any such statements are based, except where it would be required to do so under applicable law. As a result of these factors, you are cautioned not to place undue reliance on such forward-looking statements. 2
Highlights • 38% increase in global pets on plan to 161,000 (2015: 117,000) • 35% increase in Group continuing revenues to £1.2m (March 2016: £0.9m) • 16% increase in UK PPCP revenues to £0.9m (March 2016: £0.8m) • 144% increase in PPCP overseas revenues to £0.3m (March 2016: £0.1m) • Significant investment in expansion of overseas operations • Co-operation agreement signed with Midwest Veterinary Supply Inc, a major veterinary distributor, in February 2017 • Loss after tax from continuing operations £2.1m (2016: £1.5m) 3
Post period events • Sale of business, trade and assets of the Premier Buying Group (“PBG”) • £4.8m net cash proceeds from PBG sale to repay existing debt and fund international growth strategy • Actions being implemented to address identified differences between UK and US markets 4
Business fundamentals • PVG are creating a global market • Sticky and diverse customer base • Recurring revenue stream with compounding growth • Bespoke scalable IT platform underpinning international operations • No bad debt exposure • An aggressive growth opportunity underpinned by cooperation agreements (Mid- West, Zoetis, MVS, VPI) 5
Premier Pet Care Plan 6
What are Preventative Health Plans? • A structured monthly payment scheme for cats, dogs and rabbits covering many of the fixed cost, non-insurable items exclusive to veterinary practices • Delivers gold standard care to the pet at an affordable price • Delivers for the practice, significant improvements in contracted revenue, cash flow, clients, footfall and loyalty from clients • Revenue streams come from: • direct debit fee per pet per month plus • set up fee per new pet plus • practice set up fee plus • manufacturer support fees Typically included in the plan would be: • Annual booster • 2 consultations with the Vet • 12 months Flea/tick control • 12 months worm control 7
Benefits of the plan Attract new Gold standard Costs spread Guaranteed clients monthly health plan evenly over 12 months revenue Practice The Client Improved Improved Loyalty Value for cash flow client discounts on money on retentions additional premium purchases products • Manufacturer/ Significantly improved sales due to increased compliance Distributor/ • Bringing new value added business services to the practices Wholesaler • Brand reinforcement to new and existing clients • Improved accuracy in sales forecasting 8
Global IT platform • Modular system architecture • Common customer portal Customer interface & interfaces with multiple Global PCP Web Portal Data capture payment processing methodologies • Portal interface to “best in 3 rd party class” off -the-shelf WorldPay FundTech platforms processing systems GoToBilling BACS Credit Card Active Gateway Payment Processing Systems Citizen SEPA BACS Denmark Bank Clearing Clearing Clearing 9
Quarterly collection statistics – UK and Europe • 483,000 transactions in Q1 600,000 £8,000,000 2017 (equivalent to 1.9m £7,000,000 annual transactions) – 45% 500,000 increase on same quarter £6,000,000 last year Number of payments processed Value of payments processed 400,000 £5,000,000 • Customer spend of £7.0m in Q1 2017 (equivalent to 300,000 £4,000,000 £28.0m annualised spend) £3,000,000 200,000 • Generates sticky revenues £2,000,000 for PVG 100,000 • 38% increase in pets on £1,000,000 plan in last twelve months - £0 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 • 164,000 fee generating Calendar Quarters pets in April 2017 with Gross cash value £ Transactions processed growth in all regions Pets on plan # of fee generating pets on plan 000s Mar - 16 Jun – 16 Sep – 16 Dec – 16 Mar-17 107 115 121 132 137 UK 10 14 18 21 22 Europe - - - 1 2 US 117 129 139 154 161 Total 10
Global Clinic relationships Global Clinic Relationships (31 March 2017) • Despite disposal of Buying Group, PVG still maintains 1,000 number of relationships 901 885 900 with clinics in line with other significant industry 800 751 players 700 NO. OF CLINICS 600 • Important influence when 500 negotiating with 410 pharmaceutical 400 353 manufacturers and wholesalers/distributors 300 200 100 - PVG IVC (UK) CVS (UK) Banfield (US) VCA (US) 11
Diverse customer base • Total of 385 contracts with 300 practices throughout UK, Europe and US* 250 • Group has limited exposure to large corporate veterinary 200 practices – reducing risk of Number of Practices revenue fluctuation from 150 corporate acquisition activity • Only Medivet , the Group’s 100 largest customer practice, has over 10,000 pets on plan 50 • Vast majority of practices have less than 1,000 pets on plan 0 Less than 250 Between 250 and 500 Between 500 and 1000 Between 1000 and Between 2000 and Between 5000 and Greater than 10000 2000 5000 10000 Number of Active Plans UK Europe US *Practices represent the contractual relationship. One practice may have multiple clinics 12
Market opportunities Market data UK Neth Germany France Denmark USA Population 64m 17m 81m 66m 5.5m 319m Households 26m 7.4m 41m 26m 2.6m 123m Dog population 8.5m 1.6m 5.3m 7.4m 0.6 70m Dog ownership households 24% 19% 13% 21% 21% 36% Cat population 8.5m 2.6m 8.2m 11.4m 0.5m 74m Cat owner households 19% 26% 16% 27% 18% 30% 13
New clinic addressable market - UK • UK market for PPCP is UK Market Share/Opportunity better established than IVC in US and Europe 7% CVS • PPCP does not just 9% 1% Goddards serve independent 8% Vets4Pets sector - Medivet and 1% Best Friends both use Best Friends 3% PPCP 64% Medivet Pet Care Plan 7% • A substantial market PVA Pet Care Plan opportunity remains Market Opportunity Total small animal clinics – c4,800 14
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