Half-year Report

PREMIER VETERINARY GROUP PLC

("PVG" or "the Company")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2016

RAPID GROWTH IN CUSTOMER BASE WITH CONTINUING STRONG MOMENTUM

London, UK, 9 May 2016 - Premier Veterinary Group plc ("PVG" or the "Company") today announces its unaudited interim results for the six months ended 31 March 2016.

Dominic Tonner, CEO of PVG commented:

"The Company continues to grow rapidly in the preventative healthcare market. Over the twelve months since 31 March 2015, the Company's proprietary Pet Care Plan has more than doubled the number of pets on plan. PVG is continuing to invest in the global expansion of its Pet Care Plan business with the objective of achieving significant and sustained growth for the foreseeable future." 

HIGHLIGHTS

· Total number of pets on fee-generating pet care plans provided by third party veterinary clinics under PVG's preventative healthcare program for pets branded "Pet Care Plan" more than doubled to 117,000 (31 March 2015: 57,100)

· Sale in December 2015 of the Company's veterinary clinics for £6.5m to leave the Company debt free and focused on its Pet Care Plan and veterinary pharmaceutical Buying Group businesses

· 100th veterinary clinic signed up to Pet Care Plan in The Netherlands, currently PVG's most mature overseas market

· PVG's total continuing revenues increased by 31% to £1.4m for the six months to 31 March 2016 (31 March 2015: £1.1m)

· Loss after tax from continuing operations to 31 March 2016 was £1.1m (31 March 2015: £0.57m)

· Cash (excluding money held in escrow) and short term deposits of £1.6m as at 31 March 2016 (at 31 March 2015: £1.0m).

Post period events

· On 26 April 2016 Juliet Thompson appointed as Non-Executive Director and Chairman of the Board

· On 5 May 2016 announced commencement of a controlled expansion into the US for Pet Care Plan.

RESPONSIBILITY STATEMENT

For the six months ended 31 March 2016

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).

For and on behalf of the Board:

Dominic Tonner Daniel Smith

Chief Executive Officer Chief Financial Officer

6 May 2016 6 May 2016

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, through its wholly-owned subsidiary, Premier Vet Alliance Limited ("PVA"), is a leading provider of services to third party veterinary practices, including the administration of a structured, preventative healthcare program for cats, dogs and rabbits, branded "Pet Care Plan". The program is seen as a way of providing gold standard care for pets at an affordable price for the client by way of fixed monthly payments.

Pet Care Plan uses a clinical approach to prevention as this is the most effective method of ensuring illnesses are diagnosed more quickly and not given a chance to advance. PVA works alongside practices to create a tailor-made, cost-effective service for clients, one that delivers excellent care to their patients and significantly improves practice performance.  

PVA also operates a buying group (the "PVA Buying Group") which offers enhanced discounts to member practices. The specially negotiated discounts on both small and large animal products enable independent practices to compete with larger groups. The PVA Buying Group is now the UK's largest veterinary buying group without group interests in veterinary practices or veterinary wholesalers.

Overview and strategic update

As announced on 21 December 2015, following a strategic review of the Company's portfolio of assets, their potential and alternative strategies to optimise shareholder value, the Company completed the sale of its remaining veterinary practices Zetland Limited, Thanet One Limited and The Veterinary Clinic (Bearwood) Limited ("the Veterinary Business") to Independent Vetcare Limited for cash consideration of £4.1m (the "Disposal"). In addition, intercompany loan balances of £2.4m due from the Veterinary Business to other group companies were repaid on completion. As explained previously, an adjustment to reflect the sale on a zero net current asset basis was to be agreed. This was completed in April 2016 and, as a result, the consideration increased by £40,000.

The consideration received from the Disposal and repayment of intercompany loans amounting in aggregate to £6.5m has allowed the Company to repay all of its debt and, after allowing for transaction costs and acceleration of fees relating to the debt repayment, has increased net assets by £4.0m. An amount of £1m has been placed into escrow to cover potential liabilities under warranty and indemnity provisions in the sale and purchase agreement. The Directors expect this £1m to be released 12 months after completion (December 2016) and have therefore recognised it in full with other receivables.

Prior to the Disposal in December 2015, the Veterinary Business generated revenues of £1.25m and incurred a pre-tax profit of 0.16m.

The PVA business has been identified as PVG's key long-term value driver and the additional resources resulting from the Disposal will enable the Company to expand the PVA business and to accelerate the roll-out of Pet Care Plan in multiple overseas territories, leading to enhancement of shareholder value. The Disposal also re-enforces PVA's independence in terms of the provision of services to third party clinics.

As stated in the Annual Report and Accounts for the year ended 30 September 2015 (the "2015 Annual Report"), the Company's objectives are to:

· leverage the success of PVA;

· identify new markets for Pet Care Plan to be introduced in to; and

· develop other new opportunities for growth.

The report also outlined the key elements to the Company's strategy to achieve its objectives.

PVA, through Pet Care Plan, is now a leading provider of preventative animal healthcare programs to the independent veterinary sector in the UK, Republic of Ireland, Denmark and the Netherlands. Integral to the Company's strategy is to grow Pet Care Plan more aggressively in overseas territories. The Netherlands was among the first countries targeted for overseas expansion for Pet Care Plan, and the Company's business there has shown rapid growth to date. Consequently, on 23 March 2016, the Company announced that it had entered into contractual arrangements for Pet Care Plan with over 100 veterinary clinic customers in the Netherlands. Pet Care Plan now covers 9,000 pets in the Netherlands where the plan is sold under the name of Huisdieren ZorgPlan ("HZP"). There are approximately 1,000 domestic animal veterinary practices in the Netherlands and this market has similar compliance rates on vaccination and flea, worm and tick control to the UK. The Dutch customer practices have embraced HZP to improve client loyalty, increase revenue, improve cash flow and differentiate themselves in a very competitive market.

Also on 23 March 2016, the Company reported on the progress made during the second quarter in the growth in the number of fee-generating pet care plans provided by third party veterinary clinics under Pet Care Plan. In March 2016, the total number of pets on plan in the UK was 107,000 and 10,000 in the Rest of the World, (57,000 and 100 respectively in March 2015). The number of pets on plan continues to increase with growth of 4% during April 2016.

The number of PVA's Buying Group members has decreased by 5% to 307 as at 31 March 2016 (323 as at 31 March 2015).

Further progress against strategy will be reported in the 2016 Annual Report for the year ended 30 September 2016.

As set out in the 2015 Annual Report, the Company monitors its performance in implementing the Company's strategy with reference to six key performance indicators ("KPIs"). The KPIs are applied on a Group-wide basis. Performance against those KPIs in the six months ended 31 March 2016 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 in the Pet Care Plan and PVA Buying Group business areas. Sales volume growth is measured by the number of direct debits processed under Pet Care Plan and the number of PVA Buying Group members.

Pet Care Plan 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 Buying Group Management fees are earned when a member practice purchases goods and becomes entitled to negotiated rebates and discounts. These are recognised once there is a legal entitlement to receive. In general, this is during the month in which the PVA Buying Group members' spend occurs.

PVA's revenues for the six months ended 31 March 2016 increased by 31% to £1.4m (£1.07m six months ended 31 March 2015). The number of pets covered by PVA's Pet Care Plan on behalf of third party practices has increased by 105% to 117,000 as at March 2016 (57,100 as at March 2015). The total cash value of direct debit collections in the UK increased to £8.6m in the six months to 31 March 2016 (31 March 2015: £4.8m). In addition the total cash value of Euro direct debit collections increased to €580,000 in the six months to 31 March 2016 (31 March 2015: €3,000).

PVA Buying Group fee income decreased by 9% to £0.55m in the six months ended 31 March 2016 (31 March 2015: £0.59m) as a result of increased competition within the buying group market and corporate activity. Accordingly, investment has been made in new software to improve the clinic experience and provide greater clarity on PVA's charging structures, and the introduction of new initiatives to market the PVA Buying Group to potential members.

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. Management recognises the need to achieve growth in this KPI within a cost base suited to the business's balance sheet following the Disposal. The number of member clinics as at 31 March 2016 was as follows:

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 pets on active plans as at March 2015 and 2016 was as follows:

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 Pet Care Plans. The total cash value of direct debit collections in the UK increased to £8.6m in the six months to 31 March 2016 (31 March 2015: £4.8m). In addition the total cash value of Euro direct debit collections increased to €580,000 in the six months to 31 March 2016 (31 March 2015: €3,000).

Countries in which PVA is active

As Management pursues a strategy to deliver preventative healthcare programs to new clinics overseas, a KPI is the number of countries in which PVA is active. By 31 March 2016, PVA was delivering services in 4 territories (31 March 2015: 3 territories), namely the United Kingdom, Netherlands, the Republic of Ireland and Denmark. This KPI is an indicator of how many territories will be contributing recurring revenue to the Group as PVA applies its processes to deliver a mature business model in each territory in the medium term.

Debt

Following repayment of the debt the Company will no longer monitor this ratio.

Results for the six months ended 31 March 2016

The Group's total continuing revenues increased by 31% to £1.4m for the six months ended 31 March 2016 (£1.1m six months ended 31 March 2015). The operating loss for the six months ended 31 March 2016 was £0.86m (31 March 2015: 0.13m). The number of pets covered by PVA's Pet Care Plan on behalf of third party practices has increased by 105% to 117,000 as at March 2016 (57,100 as at March 2015). The total cash value of direct debit collections in the UK increased to £8.6m in the six months to 31 March 2016 (31 March 2015: £4.8m). In addition the total cash value of Euro direct debit collections increased to €580,000 (31 March 2015: €3,000).

The continuing Group's loss after tax for the six months ended 31 March 2016 was £1.1m (six months ended 31 March 2015: a loss after tax of £0.57m).

As previously announced, the Group continues to invest in overseas markets and strengthening its position in the UK and an additional £0.6m was incurred in these areas. At 31 March 2016 the staff headcount was 40 (31 March 2015: 26).

The Directors received a one-off 50% of salary bonus in recognition of the completion of the Disposal.

The share-based compensation charge for the period was £0.012m (six months ended 31 March 2015: £0.002m).

Following the settlement of the outstanding debt in the Group, it is anticipated that finance expense will be negligible in the second half of the financial year.

Dividend and dividend policy

It is, at present, intended that no dividends will be paid by the Company. 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 £2.9m at 31 March 2016 (at 31 March 2015: £0.35m). The consideration received from the Disposal and repayment of intercompany loans amounting in aggregate to £6.5m has allowed the Company to repay all of its debt and, after allowing for transaction costs and acceleration of fees relating to the debt repayment, has increased net assets by £4.0m. An amount of £1m has been placed into escrow to cover potential liabilities under warranty and indemnity provisions in the sale and purchase agreement. The Directors expect this £1m to be released 12 months after completion (December 2016).

Cash and short-term deposits were £1.6m as at 31 March 2016 (at 31 March 2015: £1.0m).

Cash flow

Net cash outflow from operating activities for the six months ended 31 March 2016 of £1.3m (six months ended 31 March 2015: £0.1m).

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

Related party transactions are disclosed in note 9 to the condensed set of financial statements.

There have been no material changes in the related party transactions set out in the 2015 Annual Report.

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 10 and 11 of the 2015 Annual Report, a copy of which is available on the Company's website www.premiervetgroup.co.uk.

These comprise:

· A decline in consumer spending or a change in consumer preference

· Increased corporate veterinary activity

· Competition with existing and potential future competitors

· Reputation

· Potential complaints and litigation

· Failure to expand the pet healthcare services or launch new initiatives

· The viability of the PVA Buying Group as a result of factors outside the Group's control

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

· Attraction and retention of key employees

· Continuity of operations

· Effective management of growth and expansion

· International expansion risk

· Ability of majority shareholder to exercise substantial influence over the Group's business

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 2015 Annual Report.

Going concern

As stated in note 2 to the condensed financial statements, the Directors are satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.

Post period events

Board and Management

As announced on 26 April 2016, Juliet Thompson was appointed as a Director and as the independent Non-Executive Chairman of the Company with effect from 25 April 2016. Juliet succeeded as Chairman Iain Ross who oversaw the successful reverse takeover of the Company into Ark Therapeutics early last year. Iain Ross remains on the Board as a Non-Executive Director.

Juliet Thompson, a chartered accountant, is currently also a non-executive director of Nexstim, a medical technology company quoted on Nasdaq in Finland and Sweden, and was Vice President of Corporate Finance of Precision Ocular, a company focused on retinal diseases, for which she recently led a successful fundraising. Juliet has built a strong track record advising healthcare corporates on strategy and the capital markets. She formerly headed up the healthcare team at Stifel and was a founder of Code Securities, a healthcare investment banking boutique, which became Nomura Code Securities where she was Head of Corporate Finance.

As previously indicated, the Company had been looking to strengthen its Board with the appointment of an additional independent Director. Having been able to attract someone of Juliet's calibre, the Board felt it was appropriate that she joined the Company as its independent Non-Executive Chairman. She brings extensive City and corporate experience which will be invaluable as the Company seeks to grow the business aggressively.

Also on 26 April 2016, the Company announced that Daniel Smith, the Chief Financial Officer, will be leaving the Company in September this year to move to another part of the UK. The Board has commenced a comprehensive recruitment process to identify Daniel's replacement and a further announcement will be made in due course.

Revised strategy for Pet Care Plan in the Nordic region

On 26 April 2016, the Company announced that, following a strategic review of its Nordic business, PVA had decided to relaunch Pet Care Plan with its own dedicated team in Denmark during May 2016.

Consequently, PVA has agreed with its partner in the Nordic region to dissolve arrangements entered into in 2014. Under the terms of the dissolution agreement both parties are free to pursue their own strategies with respect to the launch of preventative healthcare programs in the Nordic region. PVA will continue to support the existing client base in Denmark.

The revised arrangements now give PVA the freedom to make available to the full Danish veterinary market the winning formula for its Pet Care Plan, which has already proved successful in the UK and other countries. Thereafter, the Company will look towards expansion into other countries in the Nordic region.

Commencement of controlled expansion of Pet Care Plan in the US

The Company had been evaluating the US as a target market for Pet Care Plan for almost two years and felt that the time was now right for entry. Accordingly, on 5 May 2016 the Company announced that it had commenced a controlled expansion into the US for Pet Care Plan with the appointment of two Regional Sales Directors, based out of Atlanta, Georgia and Charlotte, North Carolina, plus two launching/training staff, to its US subsidiary, Premier Vet Alliance LLC.

The new Regional Sales Directors, Craig Fraser and Jennifer Scarberry, have joined the Company from DVM Resources/Animal Healthcare International and Antech Diagnostics respectively where they were Regional Managers. Both executives have significant experience in veterinary product sales and, following a recently completed training and induction period, they have already secured seven new hospital contracts for Pet Care Plan in Georgia, Mississippi, North Carolina and South Carolina.

The available market for preventative healthcare programs for pets across the US is estimated at 70 million dogs and 74 million cats (U.S. Pet Ownership & Demographics Sourcebook 2012). The largest operator in this segment in the US is reported to have one million pets on such programs.

Following our first steps in the south east region of the country, a methodical build-up of the Company's presence is planned, with the appointment of additional sales and training personnel to support the product within hospitals.

Outlook

The Company continues to grow rapidly in the preventative healthcare market. Over the twelve months since 31 March 2015, the Company's proprietary Pet Care Plan has more than doubled the number of pets on plan. PVG is continuing to invest in the global expansion of its Pet Care Plan business with the objective of achieving significant and sustained growth for the foreseeable future.

By order of the Board

Dominic Tonner Daniel Smith

Chief Executive Officer Chief Financial Officer

6 May 2016 6 May 2016

Registered office Registered number

New Bond House 04313987

Bond Street

Bristol

BS2 9AG

Condensed consolidated statement of comprehensive income

For the six months ended 31 March 2016 (unaudited)

Condensed consolidated statement of financial position

As at 31 March 2016 (unaudited)

Condensed consolidated statement of changes in equity

For the six months ended 31 March 2016 (unaudited)

Condensed consolidated statement of cash flows

For the six months ended 31 March 2016 (unaudited)

Notes to the financial information

1 General information

This interim financial information was authorised for issue on 6 May 2016. The information for the period ended 31 March 2016 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 2016 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 2015, 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 2015 were approved by the Board of Directors on 29 January 2016. 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 2015.

Going concern

As announced on 21 December 2015, following a strategic review, the Company completed the sale of its remaining veterinary practices Zetland Limited, Thanet One Limited and The Veterinary Clinic (Bearwood) Limited ("the Veterinary Business") to Independent Vetcare Limited for cash consideration of £4.1m (the "Disposal"). In addition, intercompany loan balances of £2.4m due from the Veterinary Business to other Group companies were repaid on completion. The effect on the Group balance sheet was presented in the pro-forma summary balance sheet contained on page 7 of the Annual Report and Accounts for the year ended 30 September 2015. As explained previously, an adjustment to reflect the sale on a zero net current asset basis was to be agreed. This was completed in April 2016 and, as a result, the consideration increased by £40,000.

The Directors consider that following the disposal of the veterinary businesses, the cash held within the Group enables them to meet all current liabilities as they fall due. After consideration of market conditions, the Group's financial position, its profile of cash generation and after making enquiries, the Directors have a reasonable expectation, as indicated by the financial forecasts of the Group (which take into account the risks facing the Group), that at the time of approving the financial statements both the Company and the Group have adequate resources available to continue operating in the foreseeable future. For this reason, the going concern basis continues to be adopted 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 2016.

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 has the following two income streams:

· Pet Care Plan: 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.

· PVA Buying Group: Management fees are earned when a member practice purchases goods and becomes entitled to negotiated rebates and discounts. These are recognised once there is a legal entitlement to receive. In general, this is during the month in which the PVA Buying Group members' spend occurs.

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.

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 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 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 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

Goodwill represents the excess of the fair value of consideration for a business combination over the total acquisition date fair values of the identifiable assets, liabilities and contingent liabilities acquired. 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 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.

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.

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 statement of financial position 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 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 (eg 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:

· 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.

· 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 and deferred shares are classified as equity instruments.

The share premium reserve represents the surplus of consideration paid for shares above their nominal value.

The reverse acquisition reserve represents the historic trading losses of Ark Therapeutics Group plc prior to the reverse acquisition in February 2015.

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 three 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.

Property, plant, equipment and software development

Property, plant equipment and software development 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 Group.

VAT debtor

Following a change in accounting policy in December 2013 a VAT debtor arose in relation to the buying group business. This balance remains outstanding from HMRC, however, management have concluded that the full amount of £0.13m is recoverable.

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. Under reverse accounting, the weighted average number of shares in issue during the period to 31 March 2015 reflects PVG 2007 Limited's weighted average pre-combination ordinary shares multiplied by the exchange ratio established in the acquisition, and the weighted average total actual shares of the legal parent in issue after the date of acquisition. For the comparative the weighted average number of shares in issue during the period is PVG 2007 Limited's weighted average pre-combination ordinary shares multiplied by the exchange ratio established in the acquisition.

From continuing and discontinued operations

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

4 Segmental reporting

As defined under International Financial Reporting Standard 8 (IFRS 8) management have defined that the Group's Management currently identifies the Group's three divisions as operating segments (three continuing and one discontinued) as this is the basis 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 three divisions are categorised as follows:

Veterinary Business: Day to day running of veterinary practices up to the Disposal in December 2015

Pet Care Plan: 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. This division is divided into UK and overseas.

PVA Buying Group: Management fees are earned when a member practices purchases goods and becomes entitled to negotiated rebates and discounts. These are recognised once there is a legal entitlement to receive. In general, this is during the month in which the PVA Buying Group members' spend occurs.

All revenue is derived from external customers.

5 Goodwill

Movements in the carrying amount of goodwill are as follows

All goodwill relates to the Veterinary Business operating segment; this was entirely disposed of on the 18 December 2015 for a value in excess of the carrying value.

6 Share capital

On the 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 the 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 Premier Veterinary Group plc.

7 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.

Options 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 £12,000 (2015: £2,400) in relation to share based payment.

8 Fair value measurement of financial instruments

The fair values of the loan and loan note are estimated using a discounted cash flow approach which discounts the contractual cash flows using discount rates derived from contracted interest rates. The interest rate used for this calculation was 12%.

The loan repayment option is considered to be an embedded derivative and is held at fair value. The host contract is the Revised BFSL Loan Arrangement.

9 Related party transactions

The Group 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 2016, by virtue of his shareholding Rajan Uppal is considered to be the controlling party.

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

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 Disposals

As announced on 21 December 2015, following a strategic review, the Company completed the sale of its remaining veterinary practices Zetland Limited, Thanet One Limited and The Veterinary Clinic (Bearwood) Limited ("the Veterinary Business") to Independent Vetcare Limited for cash consideration of £4.1m (the "Disposal"). In addition, intercompany loan balances of £2.4m due from the Veterinary Business to other PVG group companies were repaid on completion. £1m of the consideration is held in escrow and is expected to be released 12 months after completion in December 2016. An adjustment to reflect the sale on a zero net current asset basis was completed in April 2016 and, as a result, the consideration increased by £40,000.

On receipt of the consideration the Company repaid its outstanding loan of £2.57m due to Bybrook Financial Solutions Limited ("BFSL"). A redemption fee of £0.4m was paid to BFSL at the time of settlement as required under the revised loan arrangements outlined in Note 8.

INDEPENDENT REVIEW REPORT TO PREMIER VETERINARY GROUP PLC

Introduction

We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report of Premier Veterinary Group plc for the six months ended 31 March 2016 which comprises the Condensed consolidated statement of comprehensive income, the Condensed consolidated statement of financial position, Condensed consolidated statement of changes in equity, Condensed consolidated statement of cash flows and the related notes. 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, 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. Our review work has been undertaken so that we might state to the Company those matters we are required to state to it 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 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 2, 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' 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 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 2016 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

BRISTOL6 May 2016