Posting of Annual Report and Notice of AGM

RNS Number : 2939R

Pets At Home Group Plc

26 June 2015

 

Pets at Home Group Plc: Posting of Annual Report & Accounts and Notice of AGM

Pets at Home Group Plc (LSE: PETS) (the "Company") today announces that its Annual Report and Accounts for the year ended 26 March 2015, Notice of the 2015 Annual General Meeting ("AGM") and Form of Proxy for the 2015 AGM have been sent to shareholders and are also available on the Company's website at http://investors.petsathome.com.

In compliance with LR9.6.1, the Company has today submitted electronic copies of the following documents to the National Storage Mechanism appointed by the Financial Conduct Authority and these will shortly be available for inspection at http://www.morningstar.co.uk/uk/NSM :

·     Annual Report and Accounts for the year ended 26 March 2015

·     Notice of the 2015 AGM

·     Form of Proxy for the 2016 AGM

The Company's AGM will be held at 11.00 am on 9 September 2015 at The Hilton Hotel, 303 Deansgate, Manchester M3 4LQ.

The Company's preliminary results announcement on 4 June 2015 included, in addition to the preliminary financial results for the year ended 26 March 2015, information on important events that occurred during the year and their impact on those financial statements. That information, together with the information set out in the Appendix below  is provided in compliance with the requirements of DTR6.3.5(2) (b). This information is not a substitute for reading the full Annual Report and Accounts for the year ended 26 March 2015.

ENDS

Enquiries

Pets at Home Group Plc:

[phone]

Louise Stonier, Company Secretary

About Pets At Home

Pets at Home Group Plc is the UK's leading specialist pet omnichannel retailer and services provider. Pets at Home operates from 400 stores located across the UK. The Group operates the UK's largest small animal veterinary business with 338 practices, run principally under a Joint Venture model using the Companion Care and Vets4Pets brand names, and a specialist referral vet hospital. Pets at Home is the UK's leading operator of pet grooming services offered through its 179 Groom Room salons. The Group also owns and operates Ride-away, a specialist equine retail business with a York superstore, website and catalogue. For more information visit: http://investors.petsathome.com/

Appendix

Directors Responsibility Statement

The responsibility statement below has been prepared in connection with the Company's Annual Report and Accounts for the year ended 26 March 2015.

The Directors of Pets At Home Group Plc confirm that to the best of their knowledge:

·     The financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as a whole; and

·     the Strategic Report/Directors' Report includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

This responsibility statement was approved by the Board of Directors on 3 June 2015 and signed on its behalf by Nick Wood, Chief Executive Officer and Ian Kellett, Chief Financial Officer.

Principal Risks and Uncertainties

An effective risk management process has been adopted to help the Group achieve its strategic objectives and enjoy long term success.

The Board and the Executive Management team are collectively responsible for managing risk across the Group.  On a department by department basis risks are reviewed regularly and risk registers are updated at least three times a year.  The teams meet to discuss and agree;

§ Key risks by area (and any changes since the last review)

§ Risk ratings - by evaluating each risk and assigning a  score

§ Identifying the required actions against each risk

§ Progress in executing agreed process improvement and implementing agreed risk mitigation

This process is then reviewed/monitored and reported to the Board and Audit Committee twice a year. The key risks identified by the Board are summarised below.

Brand and Reputation

The Group recognises the need to protect its reputation, as failure to do so could result in a loss of trust and confidence by both customers and colleagues.  As a retailer of small pets across a large number of stores, the highest possible welfare standards must be maintained at all times. This also extends into the supply chain with our pet suppliers. We operate a comprehensive pet welfare audit process, utilising internal and external resources, where all stores receive unannounced visits on a regular basis. This helps ensure our high standards are maintained across the chain. With our suppliers, we expect the same high standards of welfare and all suppliers are visited regularly by vets, third party assessors, our field pet team and an animal welfare organisation and assessed against a comprehensive set of welfare and standards criteria.

The Group also deals with customers' pets on a daily basis through its veterinary practices, Groom Room salons and Support Adoption centres, which may on occasion result in the death or injury of pets whilst in our care. We have a clear set of operational protocols, with the veterinary practices subject to the professional standards mandated by the Royal College of Veterinary Surgeons. We also have highly visible field operations resource in respect of in-store pets, grooming and veterinary surgeries. Each area has specific resource focused on ensuring the highest pet welfare standards are maintained.

The Group operates a confidential 'Pet Promise Line' where colleagues are able to raise concerns about pet care directly with our Head of Pets.

Competition

The Group competes with a wide variety of retailers and vet practices, including other pet specialists, supermarkets and discounters. Online competition is also a risk, as large well known internet businesses expand into pet products and the established pet product sites improve and expand their offer. Failure to keep abreast of, and respond to, developments by our competition in the areas of price, range, quality and service could have an adverse impact on the Group's financial performance and impact opportunities for growth.

We continue to evolve our proposition through the addition of Vets and Groomers into our existing store estate whilst continuing to innovate with the regular introduction of new and exclusive products into our food and accessory ranges. As a specialist retailer, the delivery of friendly expertise through our highly engaged/trained store colleagues is a key element of our proposition and we continue to invest to ensure our service standards, as measured by our customers through Fish4opinion, are continually improved. The Pets At Home website was successfully upgraded in January 2014 to ensure that our technology platform is capable of supporting our online strategy. Further upgrades have taken place since then and the site has recently been optimised for mobile usage.

The VIP (Very Important Pet) club was launched in November 2012 and has been very successful - attracting 3.2m members at Financial year end. This customer and pet database enables more targeted marketing, which helps drive up basket values and enables us to build a stronger sense of engagement with our customers and their pets.

We track and respond to competitor pricing movements where appropriate. Continuous market research is carried out to review the pet market both at home and abroad and understand what our competitors are doing worldwide. This helps identify further changes/initiatives that need to be implemented to help keep Pets At Home ahead of the competition here in the UK and remain a leader in the market.

Stores and Services Expansion

A key part of the Group's growth strategy is to increase the number of stores and to grow its in-store and stand alone veterinary practices and Groom Room grooming salons. If we are unable to deliver the number of sites necessary to fulfil the stores and service expansion laid out in our strategy, our expected financial performance could be adversely impacted.

To successfully open a new store, we have to, in the first instance, identify an appropriate location with a store size appropriate to the local market and with lease terms that are acceptable. We have the ability, with smaller footprint stores, to utilise mezzanine space to deploy Vet and Groom Room offerings, maximising the opportunity to open the majority of stores with a full service proposition. Any proposed new store investment has to deliver an appropriate financial return after taking into account any financial impact on the existing store portfolio. These processes are equally applicable when the Group looks to open a standalone veterinary practice. However, in common with our in-store veterinary practice opening programme, we also need to recruit a joint venture veterinary partner with the ability to fund their investment into the joint venture and with the ability to provide the personal guarantee to the bank providing the third party financing to the joint venture veterinary practice.

The business maintains new store and new joint venture partner pipelines which identify potential locations and potential partners at each stage of our process. This enables the Board to monitor progress in delivering the expected number of new stores, veterinary practices and groom rooms. Certain geographical areas (for example, within the M25) represent a particular risk as suitable space for new stores, Groom Rooms and vet practices is limited and existing sites may be redeveloped. Where existing sites are at risk of redevelopment or where leases may not be renewed, specific measures are taken to maximise the opportunity for the group including considering purchasing the freehold if appropriate. To successfully open a new store, we have to, in the first instance, identify an appropriate location with a store size appropriate to the local market and with lease terms that are acceptable. We have the ability, with smaller footprint stores, to utilise mezzanine space to deploy Vet and Groom Room offerings, maximising the opportunity to open the majority of stores with a full service proposition. Any proposed new store investment has to deliver an appropriate financial return after taking into account any financial impact on the existing store portfolio. These processes are equally applicable when the Group looks to open a standalone veterinary practice. However, in common with our in-store veterinary practice opening programme, we also need to recruit a joint venture veterinary partner with the ability to fund their investment into the joint venture and with the ability to provide the personal guarantee to the bank providing the third party financing to the joint venture veterinary practice.

The business maintains new store and new joint venture partner pipelines which identify potential locations and potential partners at each stage of our process. This enables the Board to monitor progress in delivering the expected number of new stores, veterinary practices and groom rooms. Certain geographical areas (for example, within the M25) represent a particular risk as suitable space for new stores, Groom Rooms and vet practices is limited and existing sites may be redeveloped. Where existing sites are at risk of redevelopment or where leases may not be renewed, specific measures are taken to maximise the opportunity for the group including considering purchasing the freehold if appropriate.

Our People

As a specialist retailer, retaining highly trained and engaged colleagues is fundamental to our continued success and the delivery of our future growth. If we do not retain and train our colleagues, it is unlikely that we will be able to deliver the outstanding customer service which is a key element of our proposition. Our growth plans and future success are at risk if we do not recruit and retain high calibre, talented senior management.

We continue to invest in training to broaden the skill base of colleagues across the business. We also closely monitor colleague retention rates and engagement, the latter through our annual 'We're All Ears' engagement survey which is followed up by 'We're All Action' to ensure the business responds appropriately to opportunities for improvement raised by colleagues. We also have a rolling programme of listening groups across the business to ensure we are addressing issues on an ongoing basis and we are participating in the 'Great Place to Work' programme.

Our remuneration policy, as set out on pages 86 to 103 of the 2015 Annual Report, is designed to ensure executives of the necessary calibre are attracted and retained and that through our Long Term Incentive Plans and Company Share Option Plan, colleagues across the business can share in our success. Similarly we continually review the remuneration and benefits packages available to all colleagues to ensure our colleagues are appropriately rewarded for the substantial contribution they make to our growth and success. Succession plans are in place for key roles and these are regularly reviewed by the board and senior management.

Business Systems and Information Security

We are aware of the need to keep core business systems up to date, with the capability to support the Group's growth plans.

If our investments in both systems and infrastructure do not keep pace with the growth of the business there may be a consequent limitation to our ability to trade and expand. Also, the scale of system and infrastructure change is currently significant and this may impact on our ability to deliver IT services to the business.

We hold a significant amount of customer data and recognise the need to keep this secure. Any information security breach could adversely affect our reputation and the take up of our customer loyalty scheme.

We are in the process of upgrading our business critical systems to industry leading packages. SAP was implemented in the prior financial year and the HANA and BPC modules have recently been added. Our warehouse management system has been replaced with JDA during this year and core enterprise applications such as IBM Websphere have been upgraded. We continue to monitor the level of activity within the Business Systems function and will respond appropriately should IT project or service delivery be at risk.

Disaster recovery is a key part of our systems strategy, enabling us to continue to trade in the event of a system outage. Disaster Recovery plans have been reviewed and updated and a schedule for regular testing is now in place. The business also undertakes regular system penetration testing.

Our customer loyalty scheme data is held by a specialist third party who has industry standard information security accreditations and is regularly audited. Encryption is used to protect the transmission of customer data. Internal audits of IT security and data protection have recently taken place within Pets at Home, to ensure we have both a focus and improvement plan in respect of processes and control in this area.

Supply Chain/Sourcing

During the financial year, approximately 17% of the Group's Merchandise cost of goods were globally sourced, and as a consequence we are exposed to the risks associated with international trade, such as inflation, changing regulatory frameworks and currency exposure. We are also exposed to the risks associated with the quality and safety of products produced globally on behalf of the Group, many of which are own branded or exclusive private labels.

A failure to adequately manage this risk could lead to reputational damage, reflected in a lack of confidence by customers and colleagues in the Group brands.

We have two national distribution centres covering the North and South of the UK respectively. A disaster at one of the DCs may result in a significant interruption to the supply of stock for a large number of stores and in the fulfilment of internet orders.

Having Pets At Home colleagues on the ground working collaboratively with suppliers enables us to monitor closely compliance with the Group's Code of Ethics and Business Conduct policy, as well as compliance with our Supplier Quality Manual. In addition, unannounced visits are undertaken by an independent third party to further monitor compliance with Group policies. A review of our sourcing activities in the Far East was carried out by our Internal Audit department during the year and no significant issues were noted.

Exposure to foreign currency movements is mitigated through our hedging strategy. More detail on this can be found on page 138 of the Annual Report 2015.

Business continuity plans are in place for the distribution centres and plans are in place to mitigate the impact of any disaster by servicing all stores from a single distribution centre.

Liquidity and credit risk

The business requires adequate cash resources to enable it to fund its growth plans through its capital projects and/or an expansion of the Group's working capital requirement. Without adequate cash resources the Group may be unable to deliver its growth plans, with a consequent impact on future financial performance.

The Group's finances are continually monitored in the context of its growth plans. As a result the Group is confident that it has adequate medium-term financing in place, with a broad syndicate of ten banks.

The Group's growth plans in respect of joint venture veterinary practices is predicated on the availability of finance for new joint venture veterinary partners to fund both the capital cost and working capital requirement for each new practice opening. The Group has two revolving and two non-revolving facilities in place with major high street lenders which give us confidence that our medium-term growth plans are financed adequately.

The Group ensures that all cash surpluses are invested with banks which have credit ratings and investment criteria that meet the requirements set out in the Group Treasury policy, which has been approved by the Board.

The Group's key suppliers are exposed to credit risk and as part of the Group's overall risk management programme, the business has identified alternative suppliers and developed contingency plans, particularly in respect of Own Label and Private Label food products.

Treasury and Financial Risk

The Group has an exposure to exchange rate risk in respect of the US dollar which is the principal purchase currency for goods sourced from the Far East. The Group also faces risks from changes to interest rates and compliance with taxation legislation.

If we do not adequately manage this exposure there could be an impact on the Group's financial performance with a consequential impact on operational and growth plans.

This exposure to FX fluctuation is managed via forward foreign currency contracts which are designated as cash flow hedges.

The Group has borrowings with floating interest rates linked to LIBOR, thereby exposing the Group to fluctuations in LIBOR and the consequent impact on interest cost. To manage this risk the Group has interest rate swaps in place which fix the interest rate on a significant proportion of the Group borrowings. Further details can be found on page 134 of the Annual Report 2015.

All hedging activity is undertaken by the Group Treasury function in accordance with the Group Treasury policy which sets out the criteria for counterparties with whom the Group can transact and clearly states that all hedging activities are undertaken in the context of known and forecast cashflows, with speculative transactions specifically prohibited.

Dedicated tax resource is in place and specialist tax advisors are retained to assist in this area.

Regulatory and Compliance

Many of the Group's activities are regulated by legislation and standards including, but not limited to, trading, advertising, product quality, health and safety, pet shop licencing, carbon emission reporting, bribery act and data protection. Failure to comply with these may result in financial or reputational damage.

We actively monitor compliance with our existing obligations and we have internal policies and standards to ensure compliance where appropriate. We also provide training for colleagues where required and operate a confidential hotline for colleagues to raise concerns in confidence.

Our suppliers commit to adhering to relevant regulations and standards as outlined in our Quality Manual. We carry out a rolling programme of supplier audits to check for compliance with our requirements.

Extreme Weather

Prolonged extreme or unseasonal weather conditions may reduce footfall in our stores, resulting in weak sales, leading to adverse impacts on profit and inventory

We actively monitor and forecast demand and, should this risk occur, we would review planned and tactical promotional activity to determine whether strengthening this would drive sales.

Related Party Transactions

Goods and services

One non-executive director was paid a consultation fee in the period of £nil (period to 27 March 2014 £156,000).

Kohlberg Kravis Roberts & Co. L.P. received a management fee in the period of £nil (period to 27 March 2014 £1,220,000), which includes the provision of non-executive director services and expenses recharged. 

Kohlberg Kravis Roberts & Co. L.P. also received fees of £nil and expenses of £nil (period to 27 March 2014 fees of £8,685,105 and expenses of £113,735), relating to a termination payment and transaction fees following the termination of an advisory services agreement dated 19 March 2010 upon the IPO of Pets at Home Group Plc on 17 March 2014.

KKR Capital Markets LLC received fees of £nil (period to 27 March 2014 £600,000), relating to professional services associated with debt financing following the refinancing of the Pets at Home Group in April 2013, £nil (period to 27 March 2014 £1,775,000) relating to professional services associated with the debt refinancing of the Pets at Home Group in March 2014, £nil (period to 27 March 2014 £1,757,307) relating to fees in relation to the Pets at Home Group Plc IPO, and £nil (period to 27 March 2014 £200,000)  relating to professional services associated with the arrangement of loan agreements which Companion Care Management Services Limited became party to in March 2014.

The additional paid in capital of PAH Lux S.a.r.l. represented a related party transaction with investors in the Group prior to the reorganisation as described in note 1. See note 20 for details of transactions relating to the additional paid in capital during the previous year.

Veterinary practice transactions                                                                            

The Group has entered into a number of arrangements with third parties in respect of veterinary practices.  These veterinary practices are deemed to be related parties due to the factors explained in note 1.4.

Commitments relating to these veterinary practices are included within notes 24 and 25.

The transactions entered into during the period, and the balances outstanding at the end of the period are as follows:

				26 March   2015	27 March   2014
				£000	£000
	Transactions
	-  Fees for services provided to veterinary practices			28,249	21,610
	-  Rental charges to veterinary practices			7,056	5,039
	Balances
	-  Due from veterinary practice companies at end of period included within other receivables			17,334	12,673

 

END

 

 

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