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  Title	PETS AT HOME GROUP PLC Pets at Home : FY25 Prelim Results
  ID	10007029
  External ID	7797547535
  Author	Unknown
  Published Date	May 28, 2025, 2:09 a.m.
  Summary	Published on 28/05/2025 at 08:04 Key financial results FOR IMMEDIATE RELEASE, 28 MAY 2025 Pets at Home Group Plc: FY25 Preliminary Results for the 52 week period to 27 March 2025 Platform in pla
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  URL	https://uk.marketscreener.com/quote/stock/pets-at-home-group-plc-56171690/news/pets-at-home-fy25-prelim-results-50085206/
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  Content ID	6617976
  Key	19e71e6f-b8e6-4a03-8a8b-0a9ca29c4f3b
  Content	Published on 28/05/2025 at 08:04 Key financial results FOR IMMEDIATE RELEASE, 28 MAY 2025 Pets at Home Group Plc: FY25 Preliminary Results for the 52 week period to 27 March 2025 Platform in place to support future growth See note 1.26 for an explanation of the prior year restatement. Lyssa McGowan, Chief Executive Officer: "The past two years have seen a profound transformation at Pets at Home. We have moved from a business with a strong presence in pet retail and vets, to a true pet care platform. We now have a platform that is fit for the future and capable of delivering sustained outperformance and market share gains through delighting consumers and increasingly fulfilling all of their pet care needs. During this period of transformation, we have completely replatformed our digital infrastructure, built new capabilities around our data, brand & marketing, and simplified our distribution network to a single distribution centre fulfilling stores, online and subscriptions, and we have achieved this against the backdrop of a normalising pet care market and low consumer confidence. In FY25, we also saw another outstanding year of growth in our vets business, fuelled by the commitment and expertise of our partners, supported by our best-in-class scale services, platform benefits and industry knowhow. Our practices significantly outperformed a more subdued industry backdrop and delivered this progress despite the ongoing uncertainty of the CMA investigation - further demonstration of the power of our unique joint venture model. I am tremendously proud of our colleagues and partners for navigating this challenging but critical period which leaves us in a position to look to the future with confidence. While FY26 comes with its own challenges as we digest externally imposed cost headwinds and heightened macro uncertainty, our objective is clear - to deliver outperformance against our underlying markets, across our business." Financial Highlights Group consumer revenue up 2.7% to £1.96bn, against a subdued but resilient market backdrop. Vet Group consumer revenue up 13.0% , record sales supported by high quality growth driven by higher visits, average transaction values and significant growth in Care Plan revenues. Retail consumer revenue down 1.8% , impacted by a period of subdued growth in the pet sector due to a soft UK consumer backdrop throughout FY25, deflation and normalising levels of new pet ownership. In addition, we saw some transitionary impacts from our digital platform launch. However, the fundamentals of the business remain healthy with consumer satisfaction improving through the year. Total Group statutory revenues up 0.1% to £1.48bn , with Group like-for-like (LFL) revenue -0.4%. Vet Group revenues up +16.8% (LFL +16.2%) to £175.3m, with Retail revenues -1.8% (LFL -2.0%) to £1.31bn. Group underlying PBT of £133.0m, up 0.7% YoY, in line with guidance, with Group underlying PBT margin +5bps Vet Group underlying PBT of £75.9m up 23.3% , driven by the increase in fee income YoY whilst maintaining a broadly flat cost base. Retail underlying PBT of £72.9m down 16.6%, driven by the impact of lower revenues with gross margins broadly stable and good cost control. Group statutory PBT £120.6m, up 14.1% with the underlying profit fall offset by a £13.9m reduction in non-underlying costs YoY to £12.4m in FY25. Underlying EPS 21.0p , up 1.6% with a 1.4% underlying profit for the period decline, offset by 3.0% share buyback accretion. Total dividend per share of 13.0p (up 1.6%), final dividend held at 8.3p. Free cash flow up 21.5% to £83.8m, reflecting the increase in underlying PBT , lower non-underlying costs and lower share purchases linked to our employee benefit trust (EBT). Vet Group £67.5m up 15.8% driven by strong sales growth, leveraged through our capital light model Retail £30.6m up 14.6% with lower non-underlying costs helping offset lower underlying profits. Balance sheet remains robust with adjusted net cash of £6.2m (FY24: £8.8m), before lease liabilities of £348.3m. Cash and cash equivalents of £39.5m at the end of the year (FY24: £57.1m). £25m share buyback announced for FY26 , having already completed £125m in buybacks in last 3 years. Strategic Highlights FY25 was a year of strategic progress against a more challenging macro backdrop. Importantly, the key elements of our strategy are now complete and will underpin future growth. Highlights include: Pets Club members grew 5% to 8.2m helped in part by auto-enrolment on the new digital platform, further increasing our active consumer base from which we can drive share of wallet gains in the future. Our retained consumers continue to see higher ACV - faster consumer growth than anticipated diluted our total consumer ACV (down 2% to £175) but retained consumer ACV growing 1% to £216. Digital platform fully transitioned providing the foundations to leverage our Pets Club data to drive an increasingly personalised consumer experience. Distribution network optimisation complete, with all sales channels now being fully serviced by our single site distribution centre in Stafford. Subscription revenues , with 13.0% (from 10.0%) of Group Consumer revenue now generated via subscriptions. Particularly strong growth across Easy Repeat and Care Plans as our improved offer and functionality resonates with consumers. Retail consumer satisfaction +10pts since start of year driven by improvements in availability, service and value for money. Further growth in vet footprint - 3 new JV practices and 15 JV extensions completed in the year with accelerated ambitions for future supported by a robust partner pipeline. In FY26 we plan to open at least 10 new JV practices alongside 15 extensions. Continued investment in our Pet Care Centres with 4 new openings and 32 Pet Care Centre refits including 4 major refits in our new trial format. Progressed our sustainability agenda - In partnership with Meatly we supported the launch of the world's first cultivated meat dog treat and over 250 own brand pet food ranges have been carbon footprinted. Building the world's best pet care platform Our strategy is clear. We are the UK's only complete pet care provider, and our recent transformational investments will provide a platform for outperformance through unlocking new areas of growth in existing and adjacent markets, generating long-term sustainable value for all stakeholders. FY25 has been a critical year in the delivery of our strategy , completing and bedding in two major investment programs, our distribution network optimisation and our digital platform. This investment has been critical to futureproof the business and has required significant focus and resource to deliver, against a challenging and uncertain trading backdrop. With these two key programs now complete, our focus is now firmly on delivering the omnichannel benefits of these investments across our 8.2m Pets Club members. We will continue to improve our experience and broaden our appeal as we fully integrate vets, grooming and insurance going forward. Our vision is on track to build the world's best pet care platform, bringing together a best-in-class omnichannel retail proposition with our unique blend of services, through an integrated and consumer centric experience. An integrated consumer experience Our new digital platform is now live, completing a key building block of our strategy. As consumers interact with our platform, we are seeing increased conversion as consumer journeys are simplified, and higher average baskets as consumers engage with new features. While FY25 was impacted by the transition to the new platform, we have a long track record of growing our online sales. We expect to return to market outperformance in FY26 and beyond as we leverage our improved capability with a particular focus on subscriptions growth and improved mix through growing own brand and accessories participation. Our Pet Care Centres remain central to our omnichannel experience. High quality assets in their own right, and also providing an important digital halo, with online sales increasing over 25% in areas with a new Pet Care Centre opening . Our new format stores have performed well, with stronger subscription and Pets Club sign-ups, supporting a broader rollout, with 30 refreshes planned for FY26. Consumers will continue to benefit as we further enhance our experience, truly integrating our unique blend of products, services and advice. Most importantly, we can begin to use our best-in-class, first party data much more effectively to better meet consumer needs and drive incremental demand. Growing our recurring revenue streams Our revenues are increasingly predictable as our business mix improves, with more of our revenues coming from areas such as vets, grooming, and subscriptions. We plan to continue to grow this further with subscription participation still fairly low across our 8.2m Pets Club members and 0.6m non-Pets Club vet clients (of 1.7m total active vet clients). The new digital platform has already unlocked strong growth in Easy Repeat subscriptions, which are +35% YoY. These consumers are showing c50% higher frequency and c50% higher ACV than prior to taking out a plan. We have also recently launched Easy Repeat sign up in store, with over 1,000 sign-ups a day so far. 75% of these in-store sign-ups are opting for 2-4 weekly frequency vs 80% of online sign-ups being 4-12 weeks. In addition, over 90% of new sign-ups are opting for Click & Collect. Our headroom for growth remains significant, with only c3% of our 8.2m Pets Club members having an active Easy Repeat subscription compared to over 50% of our vet clients who have a Care Plan. Each 1% of consumers moved onto Easy Repeat would add £10m to our revenues. Our relaunched Care Plans have been a success in driving practice revenue growth. Our Care Plans contributed 9% to Vet Consumer revenue growth as our relaunched plans resonated well with consumers and we sold more, higher value plans, increasing the stickiness and predictability of our vet revenues. Differentiated, sector-leading vets Our unique JV model has delivered another year of double-digit growth and market share gains. Our vet group is a clear #2 in the UK First Opinion sector and is responsible for 33% of our consumer revenues, over 50% of Group underlying PBT and the majority of Group Free Cash Flow The Nation's Local Vet. The success of our vets business begins with delivering the best outcomes for consumers and their pets. Our practice owners operate with clinical freedom, build their business with a long term, community focus and compete effectively to grow their consumer base, supported by our national brand, platform and industry leading support. This shows up in differentiated economics for us and our partners. In FY25: We increased our brand consideration by 7pts and delivered a 4pts increase in consumer satisfaction from already high levels. Average practice revenues grew 12.8% to £1.4m. Joint Ventures practices reduced total indebtedness by £6.4m to £24.8m and paid c£46m out to partners in dividends, averaging over £150k per debt-free practice. This year we surpassed our vets FCF target of £60m. But the ambitions of us and our partners are not satisfied. We will deliver further growth through embedded maturity, the rollout of new practices, and investments in advanced capabilities and extensions. While we expect recovery in Retail FCF in future, we expect Vets to continue to contribute the majority of Group FCF Practice maturity is not a constraint on our growth, in FY25 sales growth in our 10+ year old practices was 11%. We have a clear track record of growing practice revenues beyond 10-years old through extensions and advanced capabilities and plan for c15 further extensions in FY26 and c100 over the medium term. We also plan to accelerate our openings, delivering >10 in FY26 and c100 over the medium term. We remain confident and consistent in our view that our unique JV model still insulates us from many areas of the CMA's concern and await the CMA's provisional findings in July 2025. Insurance Our new insurance venture will bring a disruptive, Pets branded proposition to the c£2bn pet insurance market. Pet insurance is the largest vertical outside of Pets at Home's current core operations. It is expected, by Mintel, to grow at c4% per annum reaching c£2.5bn by 2029. We have secured an experienced team, who have a 20% minority stake, to build a capital light, Pets at Home insurance proposition leveraging our brand, data and leading consumer base. We will deliver a disruptive consumer experience by leveraging AI to remove key areas of consumer friction. We expect to incur start-up losses for around 2 years as we move towards launch and begin building our book of business. We expect to reach break-even point during FY28 before generating meaningful profits thereafter. We believe over time the business is capable of contributing c10% of Group Profits. Spotlight on Sustainability Acting responsibly has always been at the heart of our business. Our sustainability agenda is fully integrated into our strategy, centred around a shared purpose of creating a better world for pets and the people who love them. Progress we have made this year includes: We have carbon footprinted over 250 of our own brand complete cat and dog food products representing over 65% of own brand complete cat and dog food sales, this is a key enabler to understanding our Scope 3 emissions and prioritising where we take action. We have Pet food bank collection points in all our Pet Care Centres, in partnership with the Blue Cross, helping to keep pets in loving homes. In FY25 we collected 1.6m meals bringing the total since this initiative was launched to over 4 million. Over 60,000 children attended one of our 'My Pet pals' or 'Scout Association' Pet Care Centre workshops over the course of the year. Our financial framework As we look forward, we have refined our medium-term framework reflecting the shape of growth and profits we expect to deliver over the medium term. Grow consumer revenue at mid-single digit rate per year, outperforming the UK pet care market. Industry growth in 2024 has been low as we have seen subdued consumer confidence, lower inflation and the normalisation of the UK pet market drag on growth. But the pet care market remains an attractive one, with growth supported by premiumisation and humanisation, as consumers treat their pets increasingly as members of the family. So, while we expect consumer confidence to remain subdued in 2025, it is expected that industry growth will improve gradually towards historic norms. We expect to outperform the market as we continue to benefit from our unique JV Vet model, alongside an accelerated vet rollout, and we begin to deliver the benefits of our new digital platform. We would expect faster growth in vets consumer revenue than in retail with vets growing on average at high single digit rates with Retail at a low to mid-single digit rate. PBT growth ahead of sales growth through operational leverage and productivity gains. Improving retail sales growth will drop through to profit growth. In addition, as we move beyond a phase of heavy investment in the business, we will continue to work hard driving efficiency through our cost base, driving profit growth ahead of sales growth. We also expect margin accretive growth in the vets business to continue, driven by operational gearing and improving the mix of our business further. Normalised capex of c£50m to drive FCF conversion of profit after tax to c90%. Our period of major investment is now complete and investment levels going forward will reflect normalised levels required to maintain a well invested, competitive platform. Unchanged Capital Allocation Policy and maintained capital discipline prioritising: Responsible investment in the core operations. A progressive ordinary dividend targeting 50% EPS payout. Inorganic growth opportunities with a focus on strategic investments and bolt-on M&A. Return excess cash to shareholders subject to maintaining a strong balance sheet and not constraining the business. FY26 Guidance Our objective for FY26 is to deliver outperformance versus the market in Vets and Retail, alongside building towards the launch of our insurance offering. We expect the current market conditions and subdued consumer backdrop to remain in FY26, with retail market growth of c2% expected. The first 6 weeks of the year have begun as expected with group profits tracking in line with guidance. In Retail: We expect revenues to outperform the underlying market as our digital investments bear fruit. Operating costs to increase no more than 5%, which includes productivity initiatives of c£30m to offset higher than usual underlying cost inflation including externally imposed headwinds of national living wage / national insurance contributions (c£18m), new packaging regulations (c£2m), the rebuild of variable pay (c£10m) and we are investing a further £3m in marketing costs to drive sales. Overall, with our current view of demand and costs we expect Retail underlying PBT to decline YoY. In our Vet Group: We expect further progress in underlying PBT albeit against the comparative of the exceptional levels of growth delivered in FY24 and FY25. We will deliver >10 new vet practices in FY26, together with a further 15 extensions. We will invest c£3m in our new insurance proposition. We expect to deliver Group underlying PBT in the range of £115-125m. We do not expect to incur any non-underlying costs. Effective tax rate is expected to be 26%. Capital investment at normalised levels of below £50m. £25m share buyback, following the £125m completed over the last 3 years. Retained consumers are active Pets Club members who transacted across the group in the last 365 days prior to the end of the reporting period for both the current and prior year. Average consumer value (ACV) is the average spend of active Pets Club members across the group over the last 365 days based on consumer revenue as defined above, rather than statutory revenue. Subscription revenue includes our Flea & Worm, Easy Repeat, Complete Care and Vac4Life plans. Performance of the online catchment surrounding the new Pet Care Centre relative to the total online performance over the same period. Performance is analysed prior to the new Pet Care Centre opening vs the performance 3 years post opening. Financial KPIs represent those used by the business to monitor performance. Management recognise that as Alternative Performance Measures they differ to statutory metrics, but believe they represent the most appropriate KPIs. Number of active Pets Club members who transacted across the group in the last 365 days prior to the end of the reporting period. Subscription revenue includes our Flea & Worm, Easy Repeat, Complete Care and Vac4Life plans and is divided by Group consumer revenue. Full time equivalent number of all vets and nurses working across the group, based on standard working hours. Results presentation A presentation for analysts and investors will be held today at 9:30am at Deutsche Numis, 45 Gresham Street, London, EC2V 7BF, attendance is by invitation only. To access a live streaming of the event, please click on the following link https://brrmedia.news/PETS_FY25 . A webcast and statement of these results will be available for playback after the event at https://www.petsathomeplc.com Our next scheduled update will be our Q1 FY26 trading statement on 31 July 2025. Citigate Dewe Rogerson: Angharad Couch About Pets at Home Pets at Home Group Plc is the UK's leading pet care business, providing pets and their owners with the very best advice, products and care. Pet products are available online or from over 450 Pet Care Centres, many of which also have vet practices and grooming salons. The Group also operates a leading small animal veterinary business, with over 440 veterinary general practices located both in our Pet Care Centres and in standalone locations. For more information visit: https://http://investors.petsathome.com/ Disclaimer This trading statement does not constitute an invitation to underwrite, subscribe for, or otherwise acquire or dispose of any Pets at Home Group Plc shares or other securities nor should it form the basis of or be relied on in connection with any contract or commitment whatsoever. It does not constitute a recommendation regarding any securities. Past performance, including the price at which the Company's securities have been bought or sold in the past, is no guide to future performance and persons needing advice should consult an independent financial adviser. Certain statements in this trading statement constitute forward-looking statements. Any statement in this document that is not a statement of historical fact including, without limitation, those regarding the Company's future plans and expectations, operations, financial performance, financial condition and business is a forward-looking statement. Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially. These risks and uncertainties include, among other factors, changing economic, financial, business or other market conditions. These and other factors could adversely affect the outcome and financial effects of the plans and events described in this statement. As a result you are cautioned not to place reliance on such forward-looking statements. Nothing in this statement should be construed as a profit forecast. The FY25 period represents the 52 weeks from 29 March 2024 to 27 March 2025. The comparative period represents the 52 weeks from 31 March 2023 to 28 March 2024. The Group's results are shown as three segments that represent the size of the respective businesses and our internal reporting structures; Retail (includes products purchased online and in-store, pet sales, grooming services and insurance commissions), Vet Group (includes general practices and our veterinary telehealth business) and Central (includes Group costs and finance expenses). Number of See note 1.26 for an explanation of the prior year restatement. FY25 non-underlying items of £12.4m. £6.9m relating to our distribution network optimisation program, £4.5m relating to restructuring of certain support functions, £3.3m relating to the CMA investigation. Alongside this we had a disposal on investment gain of £2.3m which relates to the disposal of Pure Pet Food. FY24 non-underlying items of £26.3m. £21.5m relate to our distribution network optimisation program, £3.7m relating to restructuring of certain support functions, and £1.1m relating to the write down of investments. Revenue Group consumer revenue grew 2.7% to £1,961.9m (Vet Group up 13.0% to £655.1m, Retail down 1.8% to £1,306.8m). Vet Group consumer revenue consists of revenue from both Joint Venture and company managed practices, income generated from non-revenue based fees such as supplier income and income from our telehealth business 'The Vet Connection' Group statutory revenue grew 0.1% to £1,482.1m with like-for-like (LFL ) revenue down 0.4%. Vet Group statutory revenue was up 16.8% to £175.3m with LFL revenue up 16.2%. LFL growth was higher than Joint Venture fee income which grew by 15.2% to £103.4m, due to the unwind of fee remediation (c£3m lower YoY). Revenues from company managed practices increased by 17.7% to £52.5m. The Vet Connection (our telehealth business), generated revenue of £4.0m, +24.7% YoY. During FY25 it became necessary to reappraise our approach to Care Plan recognition due to changes in the consumer proposition that resulted in a mismatch between cash receipts and revenue recognised using the previous approach. Under the new approach cash receipts and revenue recognised are closely aligned. This change resulted in a £19.9m increase in consumer revenues recognised in FY25 and a £4.9m increase in underlying PBT . The £4.9m increase in underlying PBT is greater than previously expected due to a higher level of consumer revenues from Care Plans and a higher proportion coming through our full consolidated company managed practices than previously expected. Retail statutory revenue was down 1.8% to £1,306.8m with -2.0% LFL growth. Throughout FY25 our LFL performance was impacted by a subdued UK consumer backdrop, a deflationary environment and the impacts of normalisation of new pet ownership. We also experienced some disruption in our online revenues from transitioning to our new digital platform and, in the latter part of the year, in moving our online sales across to our Stafford distribution centre, which was expected. By category, Food sales declined 1.2% where we saw elements of deflation due to higher promotional participation across the industry. Accessories was down 3.5%. Discretionary accessories remains the most impacted area due to the subdued consumer backdrop, down 5.9%. Consumable accessories was up 0.7% reflecting strong volume performance. Gross margin Group gross margin increased YoY by 17bps to 46.9%. Vets contributed 22bps towards the Group movement, with Retail down 5bps. Gross margin within the Vet Group increased by 118bps to 52.6%. The main contributor being strong sales performance within our Joint Venture estate leveraging a relatively fixed cost base and we also saw strong sales and profit conversion within our company managed practices. Gross margin within Retail was 46.1%, a 7bps YoY reduction due to adverse mix due to faster growth in food and non-discretionary accessories. FX partially offset this due to a favourable FX contracted rate in FY25 ($1.26) vs FY24 ($1.19). For FY26 we are currently hedged at a rate of $1.27. Operating costs We managed our cost base tightly in FY25. Operating costs of £558.3m were 2.4% lower, driven by a £13.9m reduction in non-underlying costs. In FY25, we incurred a total of £12.4m of non-underlying operating costs (FY24: £26.3m). Before non-underlying costs, underlying operating costs were flat YoY despite the headwinds of National Living Wage increases (c£16m) and the removal of business rates relief (c£2m). Gross margin is calculated as gross profit as a percentage of revenue. Operating costs are the sum of selling and distribution expenses, administrative expenses, other income and non-underlying costs. For FY26 we will continue to keep a tight grip on our costs. FY26 will be another year where we face higher than usual cost inflation including externally imposed cost headwinds of:  +6.7% National Living Wage increase and higher National Insurance contributions - c£18m in FY26 taking the cumulative cost of NLW and NICs absorbed over the last 3 years to c£48m. New plastic packaging regulations - c£2m. In addition, we have made choices to continue to invest in the future of the business in the form of higher marketing (c£3m) and the rebuild of bonuses (c£10m). Where possible we will be mitigating these costs as well as other cost headwinds we face through our ongoing productivity initiatives, our investments in automation and our ongoing program of lease renegotiations totalling c£30m in FY26. As a result of our productivity actions, in FY26 our operating costs will grow no more than 5%, against gross cost inflation closer to 10%. The extent to which we can further mitigate cost inflation will depend on the rate of sales growth we are able to deliver, which is dependent on how consumer demand evolves and how inflation comes through. Finance expense The net finance expense, including interest charged on lease liabilities, increased to £15.8m (FY24: £13.6m). Of this, £13.2m (FY24: £13.3m) related to interest expense on lease liabilities. Profit before tax (PBT) Group statutory PBT of £120.6m increased £14.9m (14.1% YoY) due to a £13.9m reduction in non-underlying costs. The bulk of non-underlying costs were due to the completion of our distribution network optimisation program. No non-underlying costs are expected to be incurred in FY26. Group underlying PBT was £133.0m (FY24: £132.0m), with underlying PBT margin of 9.0%, up 5bps YoY, due to a greater profit contribution from the Vet Group, which has now overtaken Retail contribution. Vet Group statutory PBT was £75.9m (FY24: £58.8m). Vet Group underlying PBT was £75.9m (FY24: £61.6m) with underlying PBT margin of 43.3% (FY24: 41.0%), driven by a strong sales performance leveraging a broadly flat cost base. Retail statutory PBT was £66.9m (FY24: £64.8m). Retail underlying PBT was £72.9m (FY24: £87.4m) with underlying profit margin of 5.6% (FY24: 6.6%). With gross margins broadly stable and operating costs held flat, the profit decline was driven by the decline in sales. Central costs of £15.8m (FY24: £17.0m) includes payroll costs for Group functions, professional fees, and PLC related costs. Central costs also include the initial Insurance set up costs of £0.4m which were incurred in FY25, with c£3m expected to be incurred in FY26. Non-underlying items (£m) (12.4) (26.3) Underlying PBT margin is calculated as underlying profit before tax as a percentage of revenue. Taxation, profit after tax & EPS Total tax expense was £32.4m for the period. The effective tax rate for FY25 is 26.7% (FY24 25.1%), which is higher than the UK corporation tax rate due to prior year adjustments in relation to deferred tax which is expected to unwind in future years with no future impact on cash tax. Statutory profit after tax increased by 11.4% to £88.2m. Statutory basic earnings per share (EPS) were 19.0 pence (FY24: 16.6 pence) and underlying basic EPS were 21.0 pence (FY24: 20.7 pence). Working capital The cash flow movement in working capital for FY25 was an outflow of £3.3m, (FY24: £4.6m outflow). Compared to FY24 last year: Inventories increased by £9.4m YoY as we intentionally built up online stock levels to support the operation as we transitioned to Stafford DC, which is expected to unwind in FY26. Trade and other receivables increased by £0.9m YoY, driven by the reducing Vet Group operating loan balance offset by timing differences in supplier-funded marketing activity. Trade and other payables have increased by £10.7m YoY linked to higher levels of inventory. Provisions decreased by £3.7m YoY as we unwound the restructuring costs provided for in FY24 linked to the now complete Distribution network optimisation program. Investment Capex was £45.9m (FY24: £42.9m/FY23 £75.4m) signalling an end to peak investment in our strategy. Investment remained focused on three strategic growth areas; £12.1m (FY24: £9.5m) digitising the business via our new digital platform, £5.0m (FY24: £6.4m) investment into distribution via our network optimisation, and £27.9m (FY24: £25.9m) investment into our Pet Care Centre estate including new Pet Care Centres and refits. Free cash flow Free cash flow (FCF) was £83.8m (FY24: £69.0m) represents an 86% FCF conversion against underlying profit after tax. Vet Group FCF £67.5m up 15.8% due to double digit consumer revenue growth flowing into JV fee income. Retail FCF £30.6m up 14.6% due to lower non-underlying costs YoY offsetting the reduced Underlying PBT The cash generation described above, enables us to invest to grow our business as well as fund our dividend payment and £25m buyback programme. Our closing net cash position at the end of the period was £6.2m (cash £39.5m, debt £33.3m), and total indebtedness was £342.1m post lease liabilities (£348.3m). This represents a leverage ratio of 0.0x underlying EBITDA or 1.4x on a lease adjusted basis. Working capital is the sum of YoY movements in trade and other receivables, inventories, trade and other payables, and provisions. Non-underlying cash costs excludes income from disposal of investment (£2.3m) and non-underlying depreciation of right-of-use asset (£3.4m). Lease payments are cash payments for the principal portion of the right-of-use lease liability, they also include costs to acquire right-of-use assets and the right-of-use asset costs. Capex is proceeds from the sale of property, plant and equipment less costs to acquire right-of-use assets and acquisition of property, plant and equipment and other intangible assets. It also includes investment capital contributions and proceeds from repayment of partner loans. The Group's underlying cash return on invested capital (CROIC) in the period decreased to 18.5% (FY24: 19.4%) having been through a period of peak investment as we built our digital platform and optimised our distribution network down to a single site, with the cash benefits to come in future years. Capital allocation Our capital allocation policy prioritises investing cash in areas that will expand the Group and deliver attractive returns. These areas include organic investment (into our digital capability, our infrastructure, and our store refit program), our dividend policy (targeting a payout of 50% of earnings per share over the medium term) and value-accretive opportunities including M&A (which are strategically aligned to expanding our platform in core and adjacent markets). We will return to shareholders any surplus cash after these items, and it is the Board's intention to review this on an annual basis. Having completed £125m in share buybacks over the past three years, reducing the shares in issue by c8%, we plan a further £25m buyback in the current financial year. Dividend The Board has recommended a final dividend of 8.3 pence per share, taking the total dividend for the year to 13.0 pence per share (FY24 12.8 pence per share). The final dividend will be payable on 16 July 2025 to shareholders on the register at the close of trading on 6 June 2025. Mike Iddon Chief Financial Officer 28 May 2025 Consolidated Income statement Consolldated statement of comprehensive Income Consolldated balance sheet Consolidated statement of changes In equity as at 27 March 2025 Consolidated statement of changes In equity as at 28 March 2024 Consolidated statement of cash flows Notes to the consolidated flnanclal statements Parent company balance sheet Parent company statement of changes In equity as at 27 March 2025 Company statement of changes In equity as at 28 March 2024 Notes lathe parent company financial statements Glossary-Alternative Performance Measures The financial information set out below does not constitute the company's statutory accounts for the periods ended 27 March 2025 or 28 March 2024 but is derived from those accounts. Statutory accounts for 2024 have been delivered to the registrar of companies, and those for 2025 will be delivered in due course. The auditor has reported on those accounts; their reports were (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498 (2) or (3) of the Companies Act 2006. 52 week period ended 27 March 2025 52 week period ended 28 March 2024 (restated) Dividends paid and proposed are disclosed in note 9. The notes on pages 20 to 69 form an integral part of these financial statements. Consolidated statement of comprehensive income for the 52 week period ended 27 March 2025 The notes on pages 20 to 69 form an integral part of these financial statements. On behalf of the Board: Mike Iddon Chief Financial Officer 28 May 2025 Company number: 08885072 The notes on pages 20 to 69 form an integral part of these financial statements. Cash flow Capital Consolidation Merger hedging Translation redemption Retained Consolidated statement of changes in equity as at 28 March 2024 Consolidated statement of cash flows for the 52 week period ended 27 March 2025 The notes on pages 20 to 69 form an integral part of these financial statements. Pets at Home Group Plc (the Company) is a company incorporated in the United Kingdom and registered in England and Wales and its registered office is Epsom Avenue, Stanley Green, Handforth, Cheshire, SK9 3RN. Accounting policies The accounting policies set out below have, unless otherwise stated, been applied consistently to all periods presented in these consolidated financial statements. Basis of preparation The Group financial statements of Pets at Home Group Plc have been prepared in accordance with UK-adopted international accounting standards (UK-adopted IFRS) and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. The Parent Company financial statements in the prior year were prepared in accordance with UK-adopted International Financial Reporting Standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under those standards. These Parent Company financial statements have been prepared in accordance with FRS 101 Reduced Disclosure Framework (FRS 101) for all periods presented, under the historical cost convention, and in accordance with the Companies Act and other applicable law. The transition has not had an impact on the values of balances previously presented and therefore no changes are required in the presentation of the prior period balances. As permitted by FRS 101, the Parent Company has taken advantage of the disclosure exemptions available under that standard in relation to standards not yet effective and presentation of a cash flow statement. The accounting policies adopted for the Parent Company are otherwise consistent with those used for the Group as set out within this note. The Company has also taken advantage of the following disclosure exemptions under FRS 101: The requirement of paragraphs 91-99 of IFRS 13 'Fair Value Measurement' The requirement of IFRS 7 'Financial Instruments: Disclosure' The requirements of 45 (b) and 46-52 of IFRS 2 'Share-based payments' The requirements in IAS 24 'Related Party Disclosures' to disclose related party transactions entered into between two or more members of a group, provided that any subsidiary which is a party to the transaction is wholly owned by such a member. On publishing the Parent Company financial statements here together with the Group financial statements, the Company has also taken advantage of the exemption provided under section 408 of the Companies Act 2006 not to publish its individual income statement and related notes that form a part of these approved Financial Statements. New standards and interpretations issued by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC) becoming effective during the 52 week period ended 27 March 2025 have not had a material impact on the Group's financial statements, these include IAS 8 amendments and IAS 1 amendments on current/non-current classification of liabilities. The OECD Pillar Two GloBE model rules introduce a global minimum corporation tax rate of 15% applicable to multinational enterprise groups with global revenue over €750m. Pillar Two legislation was substantively enacted on 20 June 2023 in the UK, the jurisdiction in which the Group's ultimate parent company is incorporated, and came into effect from 1 January 2024. The Group applies the mandatory temporary exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023. Measurement convention The consolidated financial statements are prepared on the historical cost basis except that the following assets and liabilities are stated at their fair value: derivative financial instruments, financial instruments classified as fair value through the profit or loss. Going concern The Group and Company's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Strategic Report. The financial position of the Group and Company, its cash flows, liquidity position and borrowing facilities are described in the Chief Financial Officer's review. In addition, note 23 to the financial statements includes the Group and Company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and hedging activities; and its exposures to credit risk and liquidity risk. The Directors of the Group have prepared cash flow forecasts for a period of at least 12 months from the date of the approval of these financial statements which indicate that, despite taking account of reasonably possible downsides, the Group will have sufficient funds, through its revolving credit facility, to meet its liabilities as they fall due for that period. In preparing the forecasts for the Group, the Directors have carefully considered the impact of consumer confidence, geopolitical tensions and the actual and potential impact on supply chains, as well as energy cost inflation on liquidity and future performance. The Group has also considered the impact of climate change and the Task Force on Climate Related Financial Disclosures ('TCFD') scenario analysis conducted in undertaking this assessment. The Group has access to a revolving credit facility of £300m which expires on 30 September 2028 and a £23.3m asset backed loan which expires on 27 March 2030. The Group has £33.3m drawn down at 27 March 2025 and cash balances of £39.5m. The lowest level of headroom forecast over the next 12 months from the date of signing of the financial statements is in excess of £329.0m in the base case scenario. On a sensitised basis, the lowest level of headroom forecast over the next 12 months from the date of approving of the financial statements is £301.9m due to the removal of the dividend payment in an extreme scenario. The Group has been in compliance with all covenants applicable to this facility within the financial year and is forecast to continue to be in compliance for 12 months from the date of signing of the financial statements. A number of severe but plausible downside scenarios were calculated compared to the base case forecast of profit and cash flow to assess headroom against facilities for the next 12 months. These scenarios included: Scenario 1: Reduction on Group like-for-like sales growth assumptions of 1% in each year throughout the forecast period, but ordinary dividends continue to be paid. Scenario 2: Using scenario 1 outcomes and further impacted by a conflated risk impact of £64.8m on sales and £25.1m on PBT per annum (using specific financial Accounting policies (continued) Going concern (continued) risks taken from Group risk register with sales and PBT financial impact quantified), with dividends held at 13.0p per share per annum. Scenario 3: Group like-for-like sales growth at 0% in each year and a conflated risk impact of £144.8m on sales and £44.2m on PBT is applied (using the top risks from Group risk register with sales and PBT impact quantified), with dividends cut to nil to conserve cash. Against these negative scenarios, adjusted projections showed no breach of covenants. Further mitigating actions could also be taken in such scenarios should it be required, including reducing capital expenditure. Despite net current liabilities of £135.2m at Group level and £922.8m in the Company, the Directors of Pets at Home Group Plc, having made appropriate enquiries including the principal risks and uncertainties on pages 21 to 29 of the Annual Report 2025, consider that the Group and Company will have sufficient funds to continue to meet their liabilities for a period of at least 12 months from the date of approval of these financial statements and that, therefore, it is appropriate to adopt the going concern basis in preparing the Group consolidated financial statements and the Company only financial statements as at and for the period ended 27 March 2025. Basis of consolidation Subsidiaries Subsidiaries are entities controlled by the Group. The Group controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. In assessing control, the Group takes into consideration potential voting rights that are currently exercisable. The acquisition date is the date on which control is transferred to the acquirer. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance. The Group and Company operate an Employee Benefit Trust (EBT) for the purposes of acquiring shares to fund share awards made to employees. The EBT is deemed to be a subsidiary of the Group and Company as Pets at Home Group Plc is considered to be the ultimate controlling party for accounting purposes. The assets and liabilities of this trust have been included in the consolidated financial information. The cost of purchasing own shares held by the EBT is accounted for in retained earnings. Investment in Joint Venture veterinary practices The Group has a number of non-participatory shareholdings in veterinary practice companies, which are considered Joint Venture partnerships . The veterinary practices were established under terms that require mutual agreement between the Group and the Joint Venture Partner, and do not give the Group power over decision making, nor joint control, to affect its exposure to, or the extent of, the returns from its involvement with the practices and therefore are not consolidated in these financial statements. Further, the Group is not entitled to profits, losses, or any surplus on winding up or disposal of the Joint Venture veterinary practices, and as such no participatory interest is recognised. The Group's category of shareholding in the Joint Venture veterinary practices entitles the Group to charge management fees for support services provided. For further details see notes 1.22, 16, 17 and 27. The Group's shares are non-participatory, and therefore the Group does not share in any profits, losses or other distribution of value from the Joint Venture company; the investments are held at cost less impairment, which is deemed to be their carrying value as explained further in note 16. Foreign currency Transactions in foreign currencies are translated to the respective functional currencies of Group entities at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined. The assets and liabilities of foreign operations, including goodwill and fair value adjustments arising on consolidation, are translated to the Group's presentational currency, sterling, at foreign exchange rates ruling at the balance sheet date. The revenues and expenses of foreign operations are translated at an average rate for the period where this rate approximates to the foreign exchange rates ruling at the dates of the transactions. Exchange differences arising from this translation of foreign operations are reported as an item of other comprehensive income and accumulated in the translation reserve or non-controlling interest, as the case may be. Functional currency The consolidated financial statements are presented in sterling which is the functional currency of the parent company and the presentational currency of the Group and Company, these have been rounded to the nearest £0.1m. Classification of financial instruments issued by the Group Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. These are recognised initially at fair value. Subsequent recognition is measured in accordance with the substance of the contractual agreement. Non-derivative financial instruments Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, other interest-bearing loans and borrowings, and trade and other payables. Trade and other receivables Trade receivables are recognised initially at their transaction price and other receivables are initially recognised at fair value. Subsequent to initial recognition they are both measured at amortised cost using the effective interest method, less any expected credit loss. Trade and other payables Trade payables and other payables are initially recognised at fair value. Subsequent to initial recognition they are both measured at amortised cost using the effective interest method. Cash and cash equivalents Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral part of the Group's cash management are included as a component of cash and cash equivalents for the purposes of the cash flow statement and are only offset for balance sheet purposes where the offsetting criteria are met. Accounting policies (continued) Non-derivative financial instruments (continued) Other interest-bearing loans and borrowings Interest-bearing borrowings are recognised initially at fair value, net of attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method. Investments in equity Investments in equity are initially and subsequently measured at fair value through profit or loss ('FVTPL'), with changes recognised in the profit or loss. As disclosed in note 1.6: Classification of financial instruments issued by the Group. Derivative financial instruments and hedging Derivative financial instruments Derivative financial instruments are recognised at fair value. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged (see below). Cash flow hedges Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable forecast transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in the hedging reserve. Any ineffective portion of the hedge is recognised immediately in the income statement. If a hedge of a forecast transaction subsequently results in the recognition of a financial asset or a financial liability, the associated gains and losses that were recognised directly in equity are reclassified into profit or loss in the same period or periods during which the asset acquired or liability assumed affects profit or loss, i.e. when interest income or expense is recognised. When the hedged forecast transaction subsequently results in the recognition of a non-financial item such as inventory, the amount accumulated in the hedging reserve and the cost of hedging is included directly in the initial cost of the non-financial item when it is recognised. For all other hedging forecast transactions, the amount accumulated in the hedging reserve and the cost of hedging is reclassified to profit or loss in the same period or periods during which the hedged expected future cash flows affect the profit or loss. For cash flow hedges, other than those covered by the preceding two policy statements, the associated cumulative gain or loss is removed from equity and recognised in the income statement in the same period or periods during which the hedged forecast transaction affects profit or loss. When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in accordance with the above policy when the transaction occurs. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in equity is recognised in the income statement immediately. Intra-group financial instruments Financial guarantee contracts issued to guarantee the indebtedness of companies within the Group are accounted for in accordance with 'IFRS 9 - Financial Instruments'. These guarantees are initially recognised at fair value and subsequently measured at the higher of: The amount of the expected credit loss (ECL) determined in accordance with the ECL model under IFRS 9, and The amount initially recognised, less any cumulative income recognised in accordance with IFRS 15. Property, plant and equipment Property, plant and equipment is stated at cost less accumulated depreciation and accumulated impairment losses. Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment. Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. Land and assets under construction are not depreciated. The estimated useful lives are as follows: Freehold property - 50 years Fixtures, fittings, tools and equipment - 3 to 20 years Leasehold improvements - the term of the lease Depreciation methods, useful lives and residual values are reviewed at each balance sheet date. The impact of climate change, particularly in the context of risks identified in the TCFD scenario analysis have been considered and no material impact on the carrying value, useful lives or residual values have been identified. Intangible assets Intangible assets acquired in a business combination Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost). Subsequent to initial recognition, intangible assets acquired in a business combination are reported at cost less accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately. Customer lists are valued based on the forecast net present value of the future economic relationship with those customers, adjusted for forecast retention rates. Technology based 'know how' assets are valued based on the expected cost to reproduce or replace the asset, adjusted for the functional or economic obsolescence, if present and measurable. Software is stated at cost less accumulated amortisation. Accounting policies (continued) Intangible assets (continued) Amortisation is charged to the income statement on a straight-line basis over the estimated useful life of an asset. The estimated useful lives are as follows: Software - 2 to 7 years Customer lists - 10 years Technology based know-how - 10 years Amortisation methods, useful lives and residual values are reviewed at each balance sheet date. Expenditure on Software as a Service ('SaaS') customisation and configuration that is distinct from access to the cloud software can only be capitalised to the extent it gives rise to an asset, i.e. where the Group has the power to obtain the future economic benefits and can restrict others' access to those benefits, otherwise such expenditure in relation to developing SaaS for use is expensed. The impact of climate change, particularly in the context of risks identified in the TCFD scenario analysis have been considered and no material impact on the carrying value, useful lives or residual values have been identified. Leases On completion of a lease, the Group recognises a right-of-use asset, representing its right to use the underlying asset and a lease liability, representing its obligation to make lease payments. The lease liability is measured at the present value of the lease payments over the term of the lease, discounted using the interest rate implicit in the lease, or if that rate cannot be readily determined, the Group's incremental borrowing rate. This rate is adjusted to take into account the risk associated with the length of the lease. Lease payments will include any fixed payments, including as a result of stepped rent increases. The right-of-use asset is measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the lease commencement date and any lease incentives received or premiums paid. The Group has lease contracts in relation to property and equipment. There are recognition exemptions for low-value assets and short-term leases with a lease term of 12 months or less. Any leases under a short-term licence agreement are excluded as they fall into the lease term of 12 months or less. The Group recognises the lease payments associated with these leases as an expense on a straight-line basis over the term of the lease. The total value of leases where the Group has taken a recognition exemption is disclosed in note 12. The Group has a small number of leases where it is an intermediate lessor. For these leases, it accounts for the interest in the head lease and sub-lease separately. It assesses the lease classification of the sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. The Group currently receives rental income from related Joint Venture veterinary practices which are located within the Group's retail stores. These rental incomes are disclosed in note 3. Under IFRS16, the lease classification of sub-leases is assessed by reference to the right-of-use asset under the head lease rather than the underlying asset. This rental income is presented in other income in the Consolidated Income Statement. Right-of-use assets may be impaired if the lease becomes onerous. Impairment costs would be charged to administrative expenses if this occurred. Business combinations Business combinations are accounted for by applying the acquisition method as at the acquisition date, which is the date on which control is transferred to the Group. Acquisitions on or after 26 March 2010 For acquisitions on or after 26 March 2010, the Group measures goodwill at the acquisition date as: the fair value of the consideration transferred; plus the recognised amount of any non-controlling interests in the acquiree; plus the fair value of the existing equity interest in the acquiree; less the net recognised amount (generally fair value) of the identifiable assets acquired and liabilities assumed. When the excess is negative, a bargain purchase gain is recognised immediately in profit or loss. Costs related to the acquisition, other than those associated with the issue of debt or equity securities, are expensed as incurred. Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not remeasured, and settlement is accounted for within equity. Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in profit or loss. If contingent consideration is payable and is dependent on future employment, it is recognised as an expense over the relevant period as a cost of continuing employment. There can be significant timing difference between the charges that are recorded in the Consolidated Income Statement to reflect movements in the fair value of the liability and the actual cash payments made to settle the liability. On settlement of the liability, the part of each payment relating to the original estimate of the fair value of the contingent consideration on acquisition is reported within investing activities in the cash flow statement and the part relating to the increase in the liability since the acquisition is reported within operating cash flows. Any contingent deferred consideration receivable is recognised at fair value. On a transaction-by-transaction basis, the Group elects to measure non-controlling interests, which have both present ownership interests and are entitled to a proportionate share of net assets of the acquiree in the event of liquidation, either at its fair value or at its proportionate interest in the recognised amount of the identifiable net assets of the acquiree at the acquisition date. All other non-controlling interests are measured at their fair value at the acquisition date. Acquisitions prior to 26 March 2010 (date of adoption of IFRS) IFRS1 grants certain exemptions from the full requirements of Adopted IFRS for first time adopters. In respect of acquisitions prior to 26 March 2010, goodwill is included on the basis of its deemed cost. 1 Accounting policies (continued) Investments Investments in associates and joint ventures are carried in the Consolidated Balance Sheet at cost and of their post-acquisition retained profits or losses and other comprehensive income together with any goodwill arising on the acquisition. The Group recognises the assets, liabilities, revenue and expenses of joint operations in accordance with its rights and obligations. Assessment of control with regard to Joint Ventures Disclosed in 1.22: Accounting estimates and judgements Inventories Inventories are stated at the lower of cost and net realisable value. Cost is based on the weighted average cost principle and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs in bringing them to their existing location and condition, less rebates and discounts. Provision is made against specific inventory lines where market conditions identify an issue in recovering the full cost of that Stock Keeping Unit ('SKU'). The provision focuses on the age of inventory and the length of time it is expected to take to sell and applies a progressive provision against the gross inventory based on the numbers of days' stock on hand. Where necessary, further specific provision is made against inventory lines, where the calculated provision is not deemed sufficient to carry the inventory at net realisable value. To the extent that the ageing profile of gross inventory as calculated by this provision methodology results in a material provision, it will be disclosed as an estimate that may have an impact on subsequent periods. To the extent this is material, it will be disclosed in note 1.22. Impairment excluding inventories Financial assets (including receivables) Measurement of Expected Credit Losses ('ECLs') and definition of default ECLs are a probability-weighted estimate of credit losses. Credit losses are measured as the present value of all cash shortfalls (i.e. the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive). ECLs are discounted at the effective interest rate of the financial asset. The definition of default is applicable to intercompany and related party receivables but not relevant to trade receivables where the lifetime expected credit loss is considered. The Group considers Joint Venture receivables (operating loans) to be in default when the underlying veterinary practice is significantly under-performing against its business plan, assessed based on future cashflow forecasts for the individual practices which utilise consistent assumptions across all practices. Any shortfall in repayment of the Joint Venture loans and receivables following the 10-year forecast period are considered to be in default as repayment is expected during this time. Loss given default is also determined based on the forecast shortfall amount. Those within the performing credit risk category are deemed to have low credit risk. Practices categorised within the in default credit risk categories are those considered to be in default based on their cashflow forecast. Significant increase in credit risk is not applicable to Joint Venture operating loans due to the on-demand payment terms. Initial set up loans are considered in default if they cannot be settled within one day of year end. These loans have no set repayment date but are expected to be recovered within 15 years. There is no significant increase in credit risk of any practice which has an operating loan as these are considered to be on demand, as defined above. All other loans are considered to be performing and have low credit risk. The Group considers other intercompany and related party assets to be in default when the entity does not have the forecast future funds available to repay the balance, if recalled. Write-offs The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery. Details of these provisions are explained in note 16. Non-financial assets The carrying amounts of the Group's non-financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. For goodwill, and intangible assets that have indefinite useful lives or that are not yet available for use, the recoverable amount is estimated each period at the same time. The recoverable amount of an asset or cash-generating unit as defined by IAS36 is the greater of its value in use and its fair value less costs to sell. In assessing value in use, the estimated post-tax future cash flows are discounted to their present value using a post-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purpose of impairment testing, assets that cannot be tested individually are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely independent of the cash inflows of other assets or groups of assets (the 'cash-generating unit'). The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to cash-generating units ('CGUs'). Subject to an operating segment ceiling test, for the purposes of goodwill impairment testing, CGUs to which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal reporting purposes. Goodwill acquired in a business combination is allocated to groups of CGUs that are expected to benefit from the synergies of the combination. An impairment loss is recognised if the carrying amount of an asset or its CGU exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of CGUs are allocated first to reduce the carrying amount of any goodwill allocated to the units, and then to reduce the carrying amounts of the other assets in the unit (group of units) on a pro rata basis. An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised. 1 Accounting policies (continued) Employee benefits Defined contribution plans A defined contribution plan is a post-employment benefit plan under which the Group pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the income statement in the periods during which services are rendered by employees. Short term benefits Short term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. A liability is recognised for the amount expected to be paid under short-term cash bonus or profit-sharing plans if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. Share-based payments A number of employees of the Company's subsidiaries (including Directors) receive an element of remuneration in the form of share-based payments, whereby employees render services in exchange for shares in Pets at Home Group Plc or rights over shares. Share-based payments are measured at fair value at the date of grant. The fair value of transactions involving the granting of shares is determined by the share price at the date of grant. The fair value of transactions involving the granting of share options is calculated based on a binomial model. In valuing share-based payments, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Pets at Home Group Plc ('market conditions'). The cost of share-based payments is recognised, together with a corresponding increase in equity, on a straight-line basis over the vesting period based on the Company's estimate of how many of the awards will eventually vest. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied, provided that all other performance conditions are satisfied. Where the terms of a share-based payment award are modified, as a minimum, an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any increase in the value of the transaction as a result of the modification, as measured at the date of the modification. Where a share-based payment award is cancelled, it is treated as if it had vested on the date of cancellation and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new awards are treated as if they were a modification to the original award, as described in the previous paragraph. The dilutive effect of outstanding options is reflected as additional share dilution in the computation of diluted earnings per share. Employee Benefit Trust The assets and liabilities of the Employee Benefit Trust ('EBT') have been included in the Group and Company accounts. The assets of the EBT are held separately from those of the Company. Neither the purchase nor sale of own shares leads to a gain or loss being recognised in the Group consolidated statement of comprehensive income. Investments in the Company's own shares held by the EBT are presented as a deduction from reserves and the number of such shares is deducted from the number of shares in issue when calculating the diluted earnings per share. The trustees of the holdings of Pets at Home Group Plc shares under the Pets at Home Group Employee Benefit Trust have waived or otherwise foregone any and all dividends paid. Provisions A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, that can be reliably measured and it is probable that an outflow of economic benefits will be required to settle the obligation. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects risks specific to the liability. Revenue and cost of sales Revenue represents the total amount receivable for goods and services, net of discounts, coupons, returns and excluding value added tax, sold in the ordinary course of business, and arises substantially from activities in the United Kingdom. Revenue is recognised when the Group transfers control of goods or services to a customer at the amount to which the Group expects to be entitled, and substantially all of the Group's performance obligations have been fulfilled. Depending on whether certain criteria are met, revenue is recognised either over time, in a manner that best reflects the Group's performance, or at a point in time, when control of the goods or services is transferred to the customer. Sale of goods in-store and online Retail revenue from the sale of goods is recorded net of value added tax, colleague discounts, coupons, vouchers, returns and the free element of multi-save transactions. Sale of goods represents food and accessories sold in-store and online, with revenue recognised at the point in time the customer obtains control of the goods and substantially all of the Group's performance obligations have been fulfilled, which is when the transaction is completed in-store and at point of delivery to the customer for online orders. Revenue is adjusted to account for estimates for anticipated returns and a provision is recognised within trade and other payables. Estimates for anticipated returns are calculated using past data for both in-store and online transactions. No separate asset has been recognised (with no corresponding adjustment to cost of sales) in relation to the value of products to be recovered from the customer as the products are not always in a resaleable condition. Gift vouchers and cards Revenue from the sale of gift vouchers and cards is deferred until the voucher is redeemed, at which point performance obligations have been fulfilled. In line with IFRS15 the value of revenue deferred is based on expected redemption rates. The Group continues to assess the appropriateness of the expected redemption rates against actual redemptions. Pets Club loyalty scheme Under the Pets Club loyalty scheme, points are earned by customers upon the purchase of goods and services. These points can be converted by nominated charities into gift cards for redemption against goods and services in-store and online. The sales value of the points earned under the Pet Club scheme are treated as deferred income; the sales are only recognised once the points have been redeemed by the charities, at which point performance obligations have been fulfilled. The points do not expire and have no value to the customer. 1 Accounting policies (continued) 1.19 Revenue and cost of sales (continued) Subscription orders Revenue for subscription orders is recognised at the point of delivery of each incremental order to the customer at which point performance obligations have been fulfilled. Subscription services primarily relate to the repeat order of products sold online and in-store. Provision of services Revenue from the provision of services is recorded net of value added tax, colleague discounts, coupons and discount vouchers. Provision of services represents veterinary group income, grooming revenue and insurance commissions, with revenue recognised upon provision of the service to the customer at the point at which the Group has substantially fulfilled its performance obligations. Veterinary Group income Veterinary Group income represents revenue recognised at a point in time from the provision of veterinary services from Company managed practices and income from the provision of administrative support services to Joint Venture veterinary practices. Revenue received for the provision of veterinary services is recognised at the point of provision of the service and is recognised net of value added tax, colleague discounts, coupons and vouchers. Fee income received from the Joint Venture veterinary practice companies for administrative support services is recognised in the period the services relate to and recorded net of value added tax. Fee income received from Joint Venture companies in relation to network purchasing arrangements is recognised as the contractual commitments are fulfilled to create an entitlement to the revenue. The Group also receives revenue in relation to business development for the Joint Venture companies and recognises this within operating income. The Group launched the new 'Complete Care Health' plans in June 2023, which offered a more comprehensive package of services available to customers adding discretionary elements such as clinic visits and telehealth services. Now that sufficient data is available to assess the membership usage of the component parts of the health plans we have reviewed the point at which we consider the treatment/services have been provided. Revenue is recognised in line with specific performance obligations of the plan as they are completed in line with the contract. The majority of these are met at a point in time, with the remainder over time and have been assessed based on the nature of the individual components. Under the previous application of the policy, revenue from care plans was deferred and recognised at the point at which treatment and/or services were provided against the plan at an amount that reflected the consideration to which the entity expected to be entitled in exchange for those goods or services. Once the plan had expired, any unutilised deferred revenue was recognised as revenue. The impact of this accounting policy application in the financial statements for the 52 week period ended 27 March 2025 is £4.9m. Revenue from 'Vac4Life' plans is deferred when payment is received and then recognised in reducing proportions over the first three years of the plan when vaccinations/boosters are provided. Revenue derived from the veterinary telehealth business ('TVC') is recognised over time on a pro-rated basis over the period the customers have access to the telehealth service through subscriptions. Rental income received from in-store Joint Venture veterinary practices is disclosed within note 3 and is categorised as other income. Grooming revenue Grooming revenue is recognised net of value added tax, colleague discounts, coupons and vouchers, at the point of provision of the service to the customer. Deposits received are deferred until the grooming service has been performed. Insurance commissions Insurance commissions are recognised over time on a pro-rated basis over the period the insurance policy relates to. Accrued income Accrued income relates to income in relation to fees from Joint Venture veterinary practices, and overrider and promotional income from suppliers which has not yet been invoiced. Accrued income has been classified as current as it is expected to be invoiced and received within 12 months of the period end. Supplier income is recognised on an accruals basis, based on the expected entitlement that has been earned up to the balance sheet date for each relevant supplier contract. Cost of sales Cost of sales includes costs of goods sold and other directly attributable costs, promotional income and rebate income received from suppliers, including costs to deliver administrative support services to Joint Venture veterinary practices and costs to deliver grooming services. Supplier early payment discounts are also included within cost of sales, these are offered from certain inventory suppliers based on payment of invoices within a certain time frame resulting in a percentage discount to reduce cost of sales. Supplier income A number of different types of supplier income are negotiated with suppliers via the joint business planning process in connection with the purchase of goods for resale, the largest of which being overrider income and promotional income, which are explained below. The supplier income arrangements are typically not coterminous with the Group's financial period, instead running alongside the calendar year. Such income is only recognised when there is reasonable certainty that the conditions for recognition have been met by the Group, and the income can be measured reliably based on the terms of the contract. Where the income is directly related to inventory, it is recognised as a credit within gross margin to cost of sales. To the extent that the rebate relates to unsold stock purchases it is recognised as a reduction in the cost of inventory. Where the income is in relation to a distinct service, it is recognised as other income. Supplier income is recognised on an accruals basis, based on the expected entitlement that has been earned up to the balance sheet date for each relevant supplier contract. The accrued incentives, rebates and discounts receivable at period end are included within trade and other receivables. Given the presence of the joint business plans, on the basis of the historic recoverability of accrued balances, and as amounts are typically agreed with suppliers prior to recognition, supplier income is not considered to be an area of significant estimation that could impact on the following financial year. 1 Accounting policies (continued) Revenue and cost of sales (continued) Supplier income comprises: Overrider income Overrider income comprises three main elements: Fixed percentage-based income: These relate largely to volumetric rebates based on the joint business plan agreements with suppliers. The income accrued is based on the Group's latest forecast volumes and the latest contract agreed with the supplier. Income is not recognised until the Group has reasonable certainty that the joint business agreement will be fulfilled, with the amount of income accrued regularly reassessed and remeasured throughout the contractual period, based on actual performance against the joint business plan. Fixed lump sum income: These are typically guaranteed lump sum payments made by the supplier and are not based on volume. Fixed lump sum income is usually predicated on confirmation of a supplier contract and typically includes performance conditions upon the Group, such as marketing and promotional campaigns. These amounts are recognised periodically when contractual milestones have been met such as the promotion being run or marketing in-store. Growth income: These are tiered volumetric rebates relating to growth targets agreed with the supplier in the joint business planning process. These are retrospective rebates based on sales volumes or purchased volumes. Income is recognised to the extent that it is reasonably certain that the conditions will be achieved, with such certainty increasing in the latter part of the calendar year. Promotional income Promotional income relates to supplier funded rebates specific to promotional activity run in agreement between the Group and its suppliers. Rebates are agreed at an individual inventory article level for agreed periods of time and are systemically calculated based on article sales information. No estimation is applied in calculating the promotional income receivable. Finance income and expenses Financing expenses Financing expenses comprise interest payable under the effective interest rate method, incorporating amortisation of loan arrangement fees, interest on lease liabilities and non-underlying interest on lease liabilities. Financing income Financing income comprises interest receivable on funds invested and other interest receivable. Interest receivable is recognised in profit or loss as it accrues, using the effective interest method. Taxation Tax on the profit or loss for the period comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax payable or receivable on the taxable income or loss for the period, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous periods. Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are not provided for: the initial recognition of goodwill; the initial recognition of assets or liabilities that affect neither accounting nor taxable profit other than in a business combination; and differences relating to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised. Accounting estimates and judgements The preparation of consolidated financial statements in conformity with UK adopted IFRS requires management to make judgements, estimates and assumptions concerning the future that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. These judgements are based on historical experience and management's best knowledge at the time and the actual results may ultimately differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis and revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected. Critical accounting judgements Assessment of control with regard to Joint Ventures The assessment of control with regard to Joint Ventures is now considered to be a critical accounting judgement. This is not a change in the judgement itself which remains unchanged. The Group has assessed, and continually assesses, whether the level of an individual Joint Venture veterinary practice's indebtedness to the Group, particularly those with high levels of indebtedness, implies that the Group has the practical ability to control the Joint Venture, which would result in the requirement to consolidate. In making this judgement, the Group reviewed the terms of the Joint Venture agreement and the question of practical ability, as a provider of working capital to control the activities of the practice. This included consideration of barriers to the Group's ability to exercise such practical or other control which include difficulty in replacing Joint Venture Partners due to the shortage of veterinarians in the UK and reputational damage within the veterinary network should the Group attempt to exercise control, as well as potential barriers to the Joint Venture Partner exercising their own power over the activities of the practice. We note that under the terms of the Joint Venture agreement, the partners run their practices with complete operational and clinical freedom. The Group is satisfied that on the balance of evidence from the Group's experience as shareholder and provider of working capital support to the practices, it does not have the current ability to exercise control over those practices to which operating loans are advanced, and therefore non-consolidation is appropriate. Accounting policies (continued) Accounting estimates and judgements (continued) There are no significant estimates or assumptions which would cause a material change to the carrying value of asset and liabilities within the next 12 months. Other estimates, which are not key source of estimates which could lead to a material change in carrying value within the next 12 months are explained below. Impairment of goodwill and other intangibles (other estimate). Determining whether goodwill and other intangibles are impaired requires an estimation of the value in use of the cash-generating units to which goodwill and other intangible assets have been allocated. The value in use calculation requires estimation of future cash flows expected to arise from the CGU and a suitable discount rate in order to calculate present value. Details of CGUs as well as further information about the assumptions made are disclosed in note 13. The Directors consider that it is not reasonably possible for the assumptions for the current financial year to change so significantly to warrant inclusion as a significant estimate but acknowledge that there is estimation uncertainty over the assumptions used in future financial periods when calculating future cash flows. Dividends Final dividends are recognised in the Group's financial statements as a liability in the period in which the dividends are approved by shareholders such that the Company is obliged to pay the dividend. Interim equity dividends are recognised in the period in which they are paid. Non-underlying items Income or costs considered by the Directors to be non-underlying are disclosed separately to facilitate year-on-year comparison of the underlying trade of the business. The Directors consider non-underlying costs to be those that are not generated from ordinary business operations, infrequent in nature and unlikely to reoccur in the foreseeable future. Alternative Performance Measures The Directors measure the performance of the Group based on a range of financial measures, including measures not recognised by UK-adopted IFRS. These Alternative Performance Measures may not be directly comparable with other companies' Alternative Performance Measures and the Directors do not intend these to be a substitute for, or superior to, IFRS measures. Further information can be found in the Glossary on page 74 to 76. Prior year restatement on supplier discounts In the current year the Directors have reconsidered the presentation of other income earned from marketing fees, previously offset against expenses within cost of sales. Comparatives have been restated for consistency. As a result, both revenue and cost of sales have increased by £3.6m. There is no effect on profit for the year or net assets. Segmental reporting The Group has three strategic business units, Retail, Vet Group and Central. These are consistent with those reported in the 52 week period ended 28 March 2024. The Group's operating segments are based on the internal management structure and internal management reports, which are reviewed by the Executive Directors on a periodic basis. The Executive Directors are considered to be the Chief Operating Decision Makers. The Group is a pet care business with the strategic advantage of being able to provide products, services and advice, addressing all pet owners' needs. The strategic business units offer different products and services, are managed separately and require different operational and marketing strategies. The operations of the Retail reporting segment comprise the retailing of pet products purchased online and in-store, pet sales, grooming services and insurance commissions. The operations of the Vet Group reporting segment comprise General Practice and the veterinary telehealth business. Central includes group costs and finance expenses. The following summary describes the operations in each of the Group's reportable segments. Performance is measured based on segment underlying operating profit, as included in the management reports that are reviewed by the Executive Directors. These internal reports are prepared in accordance with IFRS accounting policies consistent with these financial statements. All material operations of the reportable segments are carried out in the UK and all revenue is from external customers. A large proportion of revenue recognised within the Vet Group relates to fee income from joint venture veterinary partners which are considered to be related parties. Further information regarding these related party transactions is disclosed in note 27. 2. Segmental reporting (continued) 52 week period ended 27 March 2025 Non-underlying operating expenses in the periods ended 27 March 2025 and 28 March 2024 are explained in note 3. 52 week period ended 28 March 2024 (restated) Expenses Rental and other occupancy income from related parties is included in other income. The presentation of non-underlying costs presented above have been changed to reflect the income statement categories (selling and distribution expenses, administrative expenses and other income). Non-underlying items in operating profit Stafford Distribution Centre During the 52 week period ended 27 March 2025, the Group continued to incur a number of costs in the process of bringing into operation a new Distribution Centre to replace the existing legacy Distribution Centres. The process was a significant operational change for the Group, outside of the ordinary course of business and has now concluded. As part of the transition, the Group has incurred £7.3m operational costs which it has classified as non-underlying (£21.4m in the 52 week period ended 28 March 2024) £0.4m relates to costs for retention bonuses (£2.4m in the 52 week period ended 28 March 2024) for colleagues at the existing Distribution Centres to remain employed by the Group until the point at which the sites closed. £1.9m (£4.5m in the 52 week period ended 28 March 2024) relates to costs incurred whilst the legacy Distribution Centres and the new Distribution Centres were both in operation. Attachments Original document Permalink Disclaimer Pets at Home Group plc published this content on May 28, 2025 , and is solely responsible for the information contained herein. Distributed via Public Technologies (PUBT) , unedited and unaltered, on May 28, 2025 at 07:03 UTC
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