IVC Acquisition Ltd - Period Ending 2020-09-30

IVC Acquisition Ltd

Contents

IVC Acquisition Ltd

Company Information

IVC Acquisition Ltd

Strategic Report for the Year Ended 30 September 2020

The directors present their Strategic Report for the year ended 30 September 2020.

Principal activity

The principal activity of the company is that of an intermediate parent company. The company is part of the IVC Evidensia group which provides veterinary services and products to customers and their pets in a number of countries across Europe.

Fair review of the business

The results for the year, which are set out in the profit and loss account, show an operating loss of £5M (2019 - £7M). The loss before taxation for the year ended 30 September 2020 was £78M (2019 - £96M). At 30 September 2020, the company had net assets of £281M (2019 - £354M).

The directors are pleased with the results for the year, particularly given the impact the Covid-19 pandemic had on the third quarter of the year. Despite the impact of the Covid-19 pandemic, the results for the year are in line with management’s expectations at the start of the year reflecting how well the business recovered from the impact and how resilient it is to economic downturns.
 

Principal risks and uncertainties
IVC Acquisition Limited is an investment holding company of IVC Evidensia. It indirectly owns 1,536 sites (2019 - 1,345) of vet practices and crematoria across the United Kingdom and Europe through a number of subsidiaries. During the year, the Group continued its expansion plans and entered new markets such as Belgium.

The management of the business and the execution of the company’s strategy are subject to a number of risks. The key business risks and uncertainties affecting the company are considered to relate to competition from both national and local providers of veterinary services and the general state of the veterinary industry. The principal risks and uncertainties for IVC Evidensia can be found in the IVC Acquisition Pikco Limited accounts on page 3. There are no risks specifically relating to this company.

Key performance indicators
There are no key performance indicators specifically monitored for this company. For performance indicators of the IVC Evidensia group please see IVC Acquisition Pikco Limited accounts.

IVC Acquisition Ltd

Strategic Report for the Year Ended 30 September 2020 (continued)

Going concern
In accordance with the Financial Reporting Council's 'Going Concern and Liquidity Risk: Guidance for Directors of UK Companies 2016' the directors of all companies are required to provide disclosures regarding the adoption of the going concern basis of accounting.

The financial statements include details of the financial position of the Company, its liquidity position and borrowing.

The Company is part of the IVC Evidensia Group (“the Group”) in which a detailed going concern assessment has been made. The Group meets its day-to-day working capital requirements through operating cash flows and its acquisition requirements through senior debt facilities. The Group’s forecasts and projections, covering a period of at least 12 months from the approval of these financial statements, show that the Group should be able to operate within the level of its current debt facilities. After taking account of reasonably possible changes in trading performance, no material uncertainty exists regarding covenant compliance on the Group’s existing facilities.

As part of the going concern assessment, the Group modelled various scenarios including the impact of reasonable possible changes related to the Covid-19 pandemic. These reflected the learnings and changes implemented as a result of the pandemic thus far and Government initiatives or grants were assumed to be unavailable. It was assumed that the impact will be less severe than the first wave, as, since that point in time:

• The industry regulators have accepted that the veterinary sector is an essential service so restrictions on services would be minimal.
• Clinics would remain open having the personal, protective equipment they need and having tried and tested alternative working procedures in place.
• Following the first national lock down that ended in July 2020, the Group has seen no significant impact on revenue in areas which have been subject to subsequent local lock downs, indicating that the actions taken by the Group, and the reaction of customers, has been such that trading at or above pre-lock down levels will continue despite further lock downs.

The sensitivities applied were as follows:

• impact of Brexit in the form of delays in receiving inventory;
• increase in bank interest rates by 1%;
• a devaluation of GBP vs Swedish Krona/Euro by 10%; and
• a reduction of revenue corresponding to 25% of FY20 revenue with a reduction in Gross profit at the same margin as FY20 and assuming no additional Covid-19 initiatives are available.

The sensitivity analyses showed that the Group and therefore the Company would still have sufficient cash flows to allow it to service the Company and its’ subsidiaries’ debt and settle trading liabilities, and comply with covenant requirements under its banking facilities for a period of at least 12 months from the date of signing of the financial statements.

The directors therefore have a reasonable expectation that the Group and therefore the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

IVC Acquisition Ltd

Strategic Report for the Year Ended 30 September 2020 (continued)

Section172 (1) statement

The directors of the Company are required to act in accordance with the duties detailed in section 172 of the Companies Act 2006, which are summarised as follows:

A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to:

a) The likely consequences of any decision in the long term;
b) The interest of the Company’s employees;
c) The need to foster the Company’s business relationships with suppliers, customers and others;
d) The impact of the Company’s operations on the community and the environment;
e) The desirability of the Company maintaining a reputation for high standards of business conduct; and
f) The need to act fairly as between members of the Company.

There are no separate company only matters to be disclosed.

Customers
The Board initiates the design, implementation and regular review of a platform of care that promotes the welfare of animals we treat, adhering to all relevant national legislation. Customers expect the highest clinical standards and care to be observed.When a clinic joins IVC Evidensia, its staff are trained in safety and clinical standards to ensure animals receive care of a consistently high standard. The IVC Evidensia Hygiene Booklet was created by the Board to ensure hygiene safety in the clinics is maintained at consistently high levels.

To ensure clinical excellence across the Group, Clinical Boards are established in each country the Group operates in, which review clinical procedures and ensure clinical guidance reflects best practice. These country boards are overseen by the Group Veterinary Medical Board. This guides the Group on matters of ethics or professional standards, making recommendations on matters such as laboratory quality, education, hygiene,
anti-microbial resistance and professional conduct, as well as promoting an exchange of ideas between countries.

During the year, the Board communicates with its customers by receiving updates on key customer issues at its regular board meetings and members of the Board attend site visits so they can hear first-hand about customer concerns. The Board also reviews customer feedback through social media channels, surveys and mail and this helps to inform its actions. For example, IVC Evidensia tracks and scores highly in customer net promoter score surveys (Score:94) and in customer 'Onswitch' surveys. Based on these communications, the Board takes appropriate actions to make sure its customers are in its highest regard such as the nutrition programme based on consumer feedback mentioned below.

This year, the Board reluctantly took a decision to temporarily close a limited number of vet practices during the main period of the Covid-19 pandemic, for the safety of customers and our own staff. Social distancing policies, additional protective personal equipment was sourced and provided to all surgeries, and other safety measures were implemented before clinics were re-opened. (see Other Stakeholders section below for more detail). Other decisions that show the Board have the highest regard for its customers include the adoption of a new nutrition programme this year to support improved health of customers’ pets. Insurance initiatives and healthcare plans, such as the Pet Health Club in the UK, are also offered to customers to help provide visibility of costs throughout the year.

Recently IVC Evidensia launched a Care Fund, to assist customers who could not otherwise afford lifesaving treatment for their animal. This not only protects animal welfare it also protects the well-being of our customers and staff by providing support to an often challenging and immensely stressful decision making process. This was introduced following feedback from staff and, in turn, from customers.
 

IVC Acquisition Ltd

Strategic Report for the Year Ended 30 September 2020 (continued)

Employees
The ethical statement commits the Group to provide a safe, happy and secure work environment where we treat all our people with care, respect, empathy and kindness.

Vets joining IVC Evidensia gain access to regular training, clinical guidance and are supported in health and safety, human resources, finance and marketing activities. This enables them to focus on the clinical aspects of their work, and for many this is a key motivation in joining IVC Evidensia. The Board takes their interests into account by making vets part of a professional network of clinics, providing training via the IVC Evidensia Academy and setting standards via the in-country clinical boards.

The Board had employees’ and customers’ safety interests as its highest priority during the Covid 19 pandemic. Safety equipment was quickly put in place, clinical operating procedures were changed, and support provided so that office staff could work from home. The Group complies with the local statutory guidance on managing the risk of Covid-19and carried out a Covid-19 risk assessment. Cleaning, hand washing and hygiene procedures are all performed in line with that guidance and the Board has taken all reasonable steps to help people work from home and maintain social distancing in the office or practice workplaces. The Board acted swiftly by furloughing staff where required to protect their roles for the future during periods of reduced activity.

The Board also showed its commitment to the mental wellbeing of staff by developing a mental health strategy in conjunction with Mental Health First Aid England. A Wellbeing week held in November 2019 was highly successful with mass staff participation at the support centre in Keynsham, UK. Support for the LGBT+ community within the Group is provided through wellbeing champions and the Company also makes a counselling service available to all employees.

The Board communicates key messages and Group performance with its staff through monthly meetings where questions are asked by employees and via bi-weekly video newsletters sent to all employees. In addition, there are regular meetings coordinated throughout the group, based on areas of interest or specialism, for example the farm animal clinical directors meetings. This gives clinicians an opportunity to share experience and best practice. Based on these communications, the Board changes staff policy appropriately.
 

Suppliers
The Board is committed to the fair treatment of suppliers and is committed to paying within agreed terms of credit. Operations teams build strong relationships with our suppliers to develop mutually beneficial and lasting partnerships, engaging through regular interactions and formal reviews.

The Board recognises that relationships with suppliers are important to the Group’s long-term success. It communicates with them by being briefed on supplier feedback and issues on a regular basis. Based on these communications, the Board adjusts certain practices with suppliers in order to improve its supply chain. Our ethical statement prohibits engagement with corruption or bribery, and a zero-tolerance policy towards suppliers
is taken with this.

Environment
The ethical statement commits the board to act and implement procedures that minimise the impact our business has on the environment and to develop relationships with suppliers who share this ideal. This was shown, to a great extent, in Sweden where the business has committed to not only being carbon neutral, but “climate-positive”.

The Group set up a “Green Team” in its support centre in the UK which looks at initiatives to reduce the Group’s carbon footprint and improve the environment. Examples of initiatives introduced include encouraging staff to join community litter picking activities and the sharing of vegan recipes to help staff reduce their carbon footprint through their diet.
 

IVC Acquisition Ltd

Strategic Report for the Year Ended 30 September 2020 (continued)

Community
The Board takes the interests of the community and its social responsibility very seriously. This is illustrated to a global extent when the Group provided a quick response to the Australian bush fires in January 2020, taking a decision to fully fund teams of our own vets and nurses to work in Australia to aid wildlife recovery.

Nearer to home, the Group considers the social impact its business has on local communities and puts in policies and strategies in relation to this. At the UK support centre in Keynsham, local animal charities are supported with frequent fund-raising activities. In Finland, the Evidensia Rauma clinic agreed to neuter cats at the local animal shelter for cost price, thereby making them suitable for adoption. In addition to providing direct employment to
c.20K people, IVC Evidensia has invested in its Vets Graduate Academy, with an intake this year of 400, and its Nurse Academy.

The Board communicates with its community through senior management attending local community forums such as the Somerdale community forum at its support centre at Keynsham. This has led to the Board changing its policies in the community such as local fund raisers.
 

Investors
The Group is funded by a mixture of equity and loan finance, meaning the Board has to consider the interests of both shareholders and lenders. The Board is committed to providing its stakeholders with sustainable, profitable growth over the longer term. This is underpinned by the Group’s highly acquisitive strategy. During the year the Board took the decision to refresh the groups Revolving Credit Facility, thereby providing funding for future
acquisitions whilst maintaining liquidity for protection of the business through the pandemic, ensuring the Group had sufficient cash and working capital.

Encouraging practices to join the Group’s network increases its purchasing power and economies of scale, allowing investment into existing and new surgeries. The Group can then offer customers access to a greater range of treatments. In addition, this creates increased shareholder returns. The Board has expanded into new countries such as Belgium this year and also invested in new veterinary areas such as the large France hospital
acquisition (Fregis) to unlock new markets and develop revenue streams.

The Board also made the difficult decision undertaking a limited scope redundancy programme in its UK support office.

The Group has an open dialogue with shareholders and lenders through email communication, individual and Group meetings. Discussions cover a wide range of topics including financial performance, strategy, outlook, governance and ethical practices.

Government and regulators
The Group regularly interacts with local governments and regulators in each market to ensure animal safety is maintained in the Group’s practices.

The Group regularly communicates with the respective regulators in a variety of ways through its Group Veterinary Medical Board and national Clinical Boards in each market.

IVC Acquisition Ltd

Strategic Report for the Year Ended 30 September 2020 (continued)

Illustration of how the Board considers all stakeholder views in its acquisition strategy
The Group has continued its highly acquisitive strategy this year by purchasing another 230 sites. The Group had 1,331 sites at the start of the year and now has 1,536 sites across the UK, Ireland and Mainland Europe, also taking into account 25 closures in the year. The Board considers all stakeholders’ interests as part of its acquisition strategy.

Employees benefit through the acquisition strategy. Employees have access to a professional network with high quality training and this can be achieved by being part of a bigger group. In addition, as the Group increases its economies of scale, further investment can be made into existing surgeries, increasing the range of treatment made available. Customers want their pet to have the highest care possible and this is achieved by bringing sites into the group where vets can access the highest safety and hygiene standards as well as access to more referral centres. This means that the customer can get high quality care by sending their pet to a vet in a larger network.

Suppliers can also benefit from the Group’s acquisition strategy. They want to access more vets and can achieve higher volumes by the Group acquiring further sites. Investors seek a return on their investment, and this is in part achieved by purchasing more sites and increasing the scale of operations.
 

Approved by the Board on 1 June 2021 and signed on its behalf by:

.........................................
M A Gillings
Director

IVC Acquisition Ltd

Directors' Report for the Year Ended 30 September 2020

The directors present their report and the financial statements for the year ended 30 September 2020.

Directors of the company

The directors who held office during the year and to the date of signing were as follows:

S M Clarke (appointed 12 May 2020)

P G Franzen

M A Gillings

P M Kenyon (appointed 24 January 2020)

A Reza

D R G Hillier (resigned 2 March 2020)

Dividends
The directors do not propose a dividend in the current year or prior year.

Directors’ insurance
The company maintains insurance policies on behalf of all directors against liability arising from negligence, breach of duty and breach of trust in relation to the company.

Future developments
The company plans to continue with its strategy of acquiring high quality veterinary practices. The company has funding facilities in place to fund the planned acquisitions. The company is strongly cash generating before investing in additional acquisitions.

Financial risk management objectives and policies

Objectives and policies
The board constantly monitors the company’s trading results and revise the projections as appropriate to ensure that the company can continue to meet its future obligations as they fall due.

Price risk, credit risk, liquidity risk and cash flow risk
The company is exposed to the usual credit and cash flow risk associated with selling on credit and manages this through credit control procedures.

Credit risk in respect of bank balances is safeguarded by using banks with high credit ratings.

Engagement with suppliers, customers and other
For more detail on how the Group engages with its suppliers and customers, refer to the Section 172 (1) statement on page 4.

Going concern

Going concern has been considered in the strategic report on page 3. There are no specific post balance sheet events for this company.

Important non adjusting events after the financial period

On 9 February 2021 it was announced that, as part of its long-term commitment to IVC, EQT Private Equity is making a substantial 15% investment through its EQT IX fund, and with the transaction EQT VII fund is partially exiting its stake but will remain invested in the company. In addition, Silver Lake, a leading global technology investment firm, will be making a new 15% minority investment in IVC to help further unlock and accelerate growth from digital and technology opportunities. Lastly, Nestlé, which joined EQT Private Equity in 2019 as a minority investor and strategic partner, is also increasing its minority stake in IVC by 5% as part of this transaction. The transaction completed on 25 May 2021.

Also as part of this transaction, Islay New Group Holding SA, a company registered in Luxembourg acquired the entire shareholding of IVC New Top Holding S.A. (an indirect parent company of the Company) which was controlled by Browne Holding S.à.r.l. As no shareholder owns more than 50% of Islay New Group Holding SA, Islay New Group Holding SA became the new ultimate parent company from 25 May 2021.

IVC Acquisition Ltd

Directors' Report for the Year Ended 30 September 2020 (continued)

Disclosure of information to the auditor

Reappointment of auditor

Deloitte LLP have expressed their willingness to continue in office and appropriate arrangements are being made for them to be deemed reappointed as auditor in the absence of an Annual General Meeting.

Approved by the Board on 1 June 2021 and signed on its behalf by:

.........................................
M A Gillings
Director

IVC Acquisition Ltd

Statement of Directors' Responsibilities

IVC Acquisition Ltd

Independent Auditor's Report to the Members of IVC Acquisition Ltd

Report on the audit of the financial statements

Opinion
In our opinion the financial statements of IVC Acquisition Ltd (the ‘company’):

We have audited the financial statements which comprise:

The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the auditor's responsibilities for the audit of the financial statements section of our report.

We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the Financial Reporting Council’s (the ‘FRC’s’) Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We are required by ISAs (UK) to report in respect of the following matters where:

• the directors’ use of the going concern basis of accounting in preparation of the financial statements is not appropriate; or
• the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

We have nothing to report in respect of these matters.

Other information

IVC Acquisition Ltd

Independent Auditor's Report to the Members of IVC Acquisition Ltd (continued)

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.

We have nothing to report in respect of these matters.

IVC Acquisition Ltd

Independent Auditor's Report to the Members of IVC Acquisition Ltd (continued)

Responsibilities of directors

As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Report on other legal and regulatory requirements

Opinion on other matter prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.

Matters on which we are required to report by exception

We have nothing to report in respect of these matters.

Use of this report
This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

......................................
Andrew Wright (Senior statutory auditor)
For and on behalf of Deloitte LLP
Statutory Auditor
Bristol, United Kingdom

1 June 2021

IVC Acquisition Ltd

Profit and Loss Account for the Year Ended 30 September 2020

The above results were derived from continuing operations.

The company has no other comprehensive income for the year or the previous year. Accordingly, no statement of comprehensive income has been presented.

IVC Acquisition Ltd

(Registration number: 10505083)
Balance Sheet as at 30 September 2020

Approved and authorised by the Board on 1 June 2021 and signed on its behalf by:
 

.........................................

M A Gillings
Director

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020

The company is a private company limited by share capital, incorporated and registered in England and Wales.

The address of its registered office is:
The Chocolate Factory
Keynsham
Bristol
BS31 2AU

Summary of significant accounting policies and key accounting estimates

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.

Statement of compliance

Basis of preparation

Name of parent of group

These financial statements are consolidated in the financial statements of the company's immediate parent company, IVC Acquisition Midco Limited, and in the financial statements of IVC Acquisition Pikco Limited, a parent company.

The financial statements of IVC Acquisition Midco Limited and IVC Acquisition Pikco Limited may be obtained from Companies House.

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

Going concern

The financial statements include details of the financial position of the Company, its liquidity position and borrowing.

The Company is part of the IVC Evidensia Group (“the Group”) in which a detailed going concern assessment has been made. The Group meets its day-to-day working capital requirements through operating cash flows and its acquisition requirements through senior debt facilities. The Group’s forecasts and projections, covering a period of at least 12 months from the approval of these financial statements, show that the Group should be able to operate within the level of its current debt facilities. After taking account of reasonably possible changes in trading performance, no material uncertainty exists regarding covenant compliance on the Group’s existing facilities.

As part of the going concern assessment, the Group modelled various scenarios including the impact of reasonable possible changes related to the Covid-19 pandemic. These reflected the learnings and changes implemented as a result of the pandemic thus far and Government initiatives or grants were assumed to be unavailable. It was assumed that the impact will be less severe than the first wave, as, since that point in time:

• The industry regulators have accepted that the veterinary sector is an essential service so restrictions on services would be minimal.
• Clinics would remain open having the personal, protective equipment they need and having tried and tested alternative working procedures in place.
• Following the first national lock down that ended in July 2020, the Group has seen no significant impact on revenue in areas which have been subject to subsequent local lock downs, indicating that the actions taken by the Group, and the reaction of customers, has been such that trading at or above pre-lock down levels will continue despite further lock downs.

The sensitivities applied were as follows:

• impact of Brexit in the form of delays in receiving inventory;
• increase in bank interest rates by 1%;
• a devaluation of GBP vs Swedish Krona/Euro by 10%; and
• a reduction of revenue corresponding to 25% of FY20 revenue with a reduction in Gross profit at the same margin as FY20 and assuming no additional Covid-19 initiatives are available.

The sensitivity analyses showed that the Group and therefore the Company would still have sufficient cash flows to allow it to service the Company and its’ subsidiaries’ debt and settle trading liabilities, and comply with covenant requirements under its banking facilities for a period of at least 12 months from the date of signing of the financial statements.

The directors therefore have a reasonable expectation that the Group and therefore the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Exemption from preparing group accounts

The financial statements contain information about IVC Acquisition Ltd as an individual company and do not contain consolidated financial information as the parent of a group.

The company is exempt under section 400 of the Companies Act 2006 from the requirement to prepare consolidated financial statements as it and its subsidiary undertakings are included by full consolidation in the consolidated financial statements of its parent, IVC Acquisition Midco Limited, a company incorporated in England and Wales. The address of IVC Acquisition Midco Limited's registered office is The Chocolate Factory, Keynsham, Bristol, BS31 2AU.

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

During the 30 September 2020 financial year end, an exercise was undertaken to review intercompany agreements and balances in the IVC Evidensia group. It was discovered that certain intercompany balances had been incorrectly classified in the 2019 financial statements between non-current and current. This has now been restated accordingly as shown below. These changes do not change the reported net assets or profits of the Company in 2019.

On 6 November 2019 the Company subscribed 1 share for £1 to IVC Acquisition Midco Limited for a consideration of £71,271,489. However, the cash was received from the parent undertaking on 6 September 2019. There was no obligation for the Company to repay the cash received to the parent undertaking and it was understood by all parties that this was advanced consideration for the future share issuance that yet required final board approval. Therefore, the amount has been recorded as a consideration received for shares to be issued in the year ended 30 September 2019. This is different to the 2019 financial statements where this amount was recorded as share premium. The amount has been restated accordingly.

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

Critical accounting judgements and key sources of estimation uncertainty
In the application of the Company's accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgements in applying the Company’s accounting policies
There are no critical judgements, apart from those involving estimations (which are dealt with separately below), that the directors have made in the process of applying the Company’s accounting policies and that have the most significant effect on the amounts recognised in the financial statements.

Key source of estimation uncertainty
There are no key sources of estimation uncertainty at the end of the reporting period that may have a significant risk of causing a material adjustment to the carrying amounts of the assets and liabilities within the next financial year.

Revenue recognition

Tax

Intangible assets

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

Amortisation

Investments

Cash and cash equivalents

Foreign currency transactions and balances

Any balances denominated in a foreign currency within the company have been translated at the closing rate into sterling.

Trade creditors

Borrowings

Share capital

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

Defined contribution pension obligation

Financial instruments

Classification
Financial instruments are classified and accounted for according to the substance of the contractual arrangement, as financial assets, financial liabilities or equity instruments. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities. Where shares are issued, any component that creates a financial liability of the company is presented as a liability on the balance sheet. The corresponding dividends relating to the liability component are charged as interest expenses in the profit and loss account.

 Recognition and measurement
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a financing transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument.

Interest revenue is subsequently carried at amortised cost using the effective interest rate method, less provision for impairment.

Impairment
For financial assets carried at amortised cost, the amount of an impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate.

For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’s carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date.

Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised.

The analysis of the company's revenue for the year from continuing operations is as follows:

The analysis of the company's turnover for the year by market is as follows:

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

Arrived at after charging:

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

The aggregate payroll costs (including directors' remuneration) were as follows:

The monthly average number of persons employed by the company (including directors) during the year, analysed by category was as follows:

The directors' remuneration for the year was as follows:

During the year the number of directors who were receiving benefits was as follows:

In respect of the highest paid director:

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

The tax on loss before tax for the year is higher than the standard rate of corporation tax in the UK (2019 - higher than the standard rate of corporation tax in the UK) of 19% (2019 - 19%).

The differences are reconciled below:

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

Additions in the year related to the £4,646,000 recapitalisation of Evidensia France SAS and the £2,948,000 recapitalisation of Evidensia Belgium BVBA, both completed on 21 September 2020.

Details of undertakings

Details of the investments in which the company holds 20% or more of the nominal value of any class of share capital are as follows:

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

The principal activity of Independent Vetcare Limited and Evidensia Holding AB is the provision of veterinary services. The principal activity of all other companies was that of dormant companies.

The company also owns a number of other trading subsidiaries indirectly via Independent Vetcare Limited and Evidensia Holding AB, details of which are recorded in Note 22.

The registered office for all companies registered in England and Wales is The Chocolate Factory, Keynsham, Bristol, BS31 2AU. The registered office for all companies registered in Scotland is 58 Argyle Street, Inverness, IV2 3BB. The registered office for all companies registered in Northern Ireland is 133 Galgorm Road, Ballymena, BT42 1DE. The registered office for all companies registered in the Isle of Man is 33-37 Athol Street, Douglas, Isle of Man, IM1 1LB.

Details of debtors: amounts falling due after more than one year

£1,879M (2019 - £1,503M) of amounts owed by group undertakings are secured and classified as due after more than one year. Interest of 4.7% per annum is earned on these amounts.

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

£749M (2019 - £719M) of amounts owed to group undertakings are secured, re-payable on demand and carry interest at 4% - 4.7% per annum. £1,375M (2019 - £1,201M) of amounts owed to group undertakings are secured, classified as non current and carry interest at 4% - 4.7%.

Total bank loans outstanding of £1,375M (2019 - £1,201M) (after deducting £19M (2019 - £20M)) of costs associated with the raising of this finance which are being released to the profit and loss accounts over the term of the debt; i.e. total bank debt was £1,394M (2019 - £1,221M) at 30 September 2020 are repayable in 2025. The rate of interest on each loan for each interest period is the percentage rate per annum, which is the aggregate of the applicable margin and LIBOR as the case may be (between 3.75% and 5.22%). Interest is paid in instalments at intervals left to the Company's discretion, subject to the group’s compliance with banking covenants.

The Company is bound by an intra-group cross guarantee in respect of bank debt with other members of the Group. The amount guaranteed at 30 September 2020 is £1,394M (2019 - £1,221M) and is secured by a debenture over the assets and undertakings of certain companies in the Group.
 

Allotted, called up and fully paid shares

New shares allotted

Issue of share capital from prior year contribution
During the year, the Company issued 1 ordinary share having an aggregate nominal value of £1 for a value of £71,271,489. The amount was paid down to the Company on 6 September 2019, but not issued until 6 November 2019 (see page 18 for more details).

Rights, preferences and restrictions

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

Share premium account
Includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium.

Consideration received for shares to be issued
Represents premiums received on issue of share capital where the shares are yet to be issued.

Capital redemption reserve
Represents the amount that the company has transferred to the profit and loss account and is required to retain as a result of repurchasing its own shares. It is a non-deductible reserve.

Profit and loss account
Includes all current and prior periods retained profit and losses.

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

Defined contribution pension scheme

The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £25,165 (2019 - £29,364).

Contributions totalling £Nil (2019 - £3,576) were payable to the scheme at the end of the year and are included in creditors.

The company is controlled by IVC Acquisition Midco Limited, incorporated in England and Wales. The ultimate parent undertaking at the financial year end was Browne Holding S.à.r.l., a company registered in Luxembourg. On 25 May 2021, Islay New Group Holding SA, a company registered in Luxembourg acquired the entire shareholding of IVC New Top Holding S.A.(an indirect parent company of the Company) which was controlled by Browne Holding S.à.r.l. As no shareholder owns more than 50% of Islay New Group Holding SA, Islay New Group Holding SA became the new ultimate parent company from 25 May 2021.

The parent of the largest group in which these financial statements are consolidated is IVC Acquisition Pikco Limited, incorporated in England and Wales.

The address of IVC Acquisition Pikco Limited is:
The Chocolate Factory
Keynsham
Bristol
BS31 2AU

The parent of the smallest group in which these financial statements are consolidated is IVC Acquisition Midco Limited, incorporated in England and Wales.

The address of IVC Acquisition Midco Limited is:
The Chocolate Factory
Keynsham
Bristol
BS31 2AU

The address of the smallest and largest subsidiary undertakings are the same as above.

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

The company has taken advantage of the exemption available and has not disclosed transactions with the ultimate parent company or any wholly owned subsidiary of the group.

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)

IVC Acquisition Ltd

Notes to the Financial Statements for the Year Ended 30 September 2020 (continued)