Pets at Home : Notice of AGM

FOR IMMEDIATE RELEASE, 22 JUNE 2016

Pets at Home Group Plc (LSE: PETS) (the 'Company') today announces that its Annual Report and Accounts for the year ended 31 March 2016 ('Annual Report'), Notice ('Notice') of the 2016 Annual General Meeting ('AGM') and Form of Proxy for the 2016 AGM have been sent to shareholders and the Annual Report and Notice are available on the Company's website at http://investors.petsathome.com.

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

· Annual Report and Accounts for the year ended 31 March 2016

· Notice of the 2016 AGM

· Form of Proxy for the 2016 AGM

The Company's AGM will be held at 11.00 am on 14 September 2016 at the Macdonald Manchester Hotel, London Road, Piccadilly, Manchester M1 2PG.

The directors of the Company have determined that all of the resolutions to be put to a vote at the AGM will be decided on a poll.

The Company's preliminary results announcement on 26 May 2016 included, in addition to the preliminary financial results for the year ended 31 March 2016, information on important events that occurred during the year and their impact on those financial statements. That information, together with the information set out in the Appendix below is provided in compliance with the requirements of DTR6.3.5(2) (b). This information is not a substitute for reading the full Annual Report and Accounts for the year ended 31 March 2016.

ENDS

About Pets At Home

Pets at Home Group Plc is the UK's leading specialist pet omnichannel retailer and services provider. Pets at Home operates from 419 superstores located across the UK. The Group operates the UK's largest small animal veterinary business with 388 practices, run principally under a Joint Venture model using the Vets4Pets and Companion Care brand names, and four veterinary specialist referral centres. Pets at Home is the UK's leading operator of pet grooming services offered through its 240 grooming salons. The Group also operates 7 specialist High Street based dog stores, called Barkers, as well as Ride-away, an equine retail business with a superstore and website. For more information visit:http://investors.petsathome.com/

Appendix

Directors Responsibility Statement

The responsibility statement below has been prepared in connection with the Company's Annual Report and Accounts for the year ended 31 March 2016.

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

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

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

The Directors of Pets at Home Group Plc consider the annual report and accounts taken as a whole, is fair, balanced and understandable and provides the necessary information for shareholders to assess the Group's position and performance, business model and strategy.

This responsibility statement was approved by the Board of Directors on 25 May 2016 and signed on its behalf by Ian Kellett, Group Chief Executive Officer.

Principal Risks and Uncertainties

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

The Board and the Executive Management team are collectively responsible for managing risk across the Group. Key risks are allocated to an Executive Management Team member for oversight and ultimate ownership. The full Executive Management Team supported by key members of the Operating Board are responsible for closely managing the most significant risks.

Internal Audit co-ordinates the risk management process and holds meetings with all risk owners across the business three times a year following which the individual risk registers are updated including actions and progess made and an assessment of risk ratings by evaluating each risk and assigning a score

The Health and Safety Committee assists the Board in managing the risk of health and safety and security and holds quarerlty meetings with stakeholders from across the Group. It recommends to the Board and Group appropriate policies and procedures.

The Audit Committee the oversees the risk management process on behalf of the Board. It receives and reviews detailed risk reports prepared on a department by department basis (twice a year). The chair of the Audit Committee, together with the committee, completes a detailed review of the risk reports. Regular deep dives are also conducted into key risk areas with relevant Executive Board members to understand the nature of the risks and adequacy of the mitigations and controls that are in place.

The key risks identified by the Board are summarised below.

Brand and reputation

Description and impact

The Group places pet welfare as its highest priority and its number one value, pets before profit, reflects this. It also recognises the need to protect its brand and reputation. Failure to do so could result in a loss of trust and confidence by both customers and colleagues.

Mitigation

As a retailer of small pets across a large number of stores, the highest possible welfare standards must be maintained at all times and we have rigorous processes in place to ensure this. This also extends into the supply chain with our pet suppliers. We operate a comprehensive pet welfare audit process, utilising internal and external resources, where all stores receive unannounced visits on a regular basis. This helps ensure our high standards are maintained across the chain. With our suppliers, we expect the same high standards of welfare and all suppliers are visited regularly by vets, third party assessors, our field pet team and an animal welfare organisation and are assessed against a comprehensive set of welfare and standards criteria. As an example of our prioritising of pet welfare, during Easter 2016 we temporarily halted the sale of rabbits in response to concerns over the welfare of rabbits bought at Easter.

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

We operate a confidential 'Pet Promise Line' where colleagues are able to raise concerns about pet care directly with our Head of Pets. Any calls to this line result in appropriate action to address the concerns raised.

Pet welfare across the Group is overseen by the 'Pets Before Profit' Board committee. This meets regularly to review pet welfare and check that appropriate processes are in place to ensure we maintain our high welfare standards.

Outlook

As we continue to increase our size and scale, we must work to ensure that pet welfare standards continue to be maintained at a high level across the Group. We will continue to monitor welfare standards closely and take appropriate steps where required to maintain them.

Change on prior year: unchanged

Strategic priorities: Grow like for like, grow space and optimise footprint, grow margins

Competition

Description and impact

The Group competes with a wide variety of retailers and vet practices, including other pet specialists, supermarkets and discounters. Online competition is also a risk, as large well-known internet businesses expand into pet products and the established pet product sites improve and expand their offer.

Failure to keep abreast of, and respond to, developments by our competition in the areas of price, range, quality and service could have an adverse impact on the Group's financial performance and impact opportunities for growth.

Mitigation

We continue to evolve our proposition through the ongoing addition of Vets and Groomers into our existing store estate whilst continuing to innovate with the regular introduction of new and exclusive products into our food and accessory ranges. We continue to open new stores, vet practices and Groom Rooms as well as Barkers for Dogs stores. As a specialist retailer, the delivery of friendly expertise through our highly engaged/trained store colleagues is a key element of our proposition and we continue to invest to ensure our service standards, as measured by our customers through Fish4opinion, are continually improved. Further enhancements are being made to the Pets at Home website to ensure that it is an optimal experience for customers.

The VIP (Very Important Pet) club was launched in November 2012 and has been very successful - attracting 4.5m members at financial year-end. This customer and pet database enables more targeted marketing, which helps drive up basket values and enables us to build a stronger sense of engagement with our customers and their pets.

In February 2016, we launched Brand Match where customers are able to check the prices of their branded purchases from Pets at Home against Tesco.com and Jollyes.com. If the customer's shopping would have been cheaper at Tesco.com or Jollyes.com, a money back voucher is issued. This helps to give customers the confidence that, as well as choosing the best store to shop for their Very Important Pets they can now be assured that they do not need to look around to make sure they are paying the best prices.

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

Outlook

Vacancy levels for existing store space have decreased leading to more competition for physical store space. There has been some increase in the number of pure play online competitors but this is not expected to have a significant impact on our business. Competitor pricing strategies could become more competitive.

Change on prior year: unchanged

Strategic priorities: Grow like for like, grow space and optimise footprint, grow margins

Stores and services expansion

Description and impact

A key part of the Group's growth strategy is to increase the number of stores and to grow its in-store and standalone veterinary practices, Groom Room salons and Barkers for Dogs stores.

If we are unable to deliver the number of sites necessary to fulfil the stores and services expansion laid out in our strategy and maintain our existing numbers of sites, our expected financial performance could be adversely impacted.

Mitigation

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

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

Outlook

An increased proportion of our new stores will be located on newly developed retail parks and park extensions. Whilst this can create greater timing uncertainties, we do not expect any challenges in the short term. However, new developments are very much dependant on tenant demand and the overall economy.

Change on prior year: unchanged

Strategic priorities: grow like for like, grow space and optimise footprint, grow margins

Our People

Description and impact

As a specialist retailer, retaining highly trained and engaged colleagues is fundamental to our continued success and the delivery of our future growth.

A significant number of colleagues in certain areas of our business are EU nationals. If the referendum in June 2016 results in a vote to leave the EU, then retention and further recruitment of EU nationals may be at risk.

If we do not retain and train our colleagues, it is unlikely that we will be able to deliver the outstanding customer service, which is a key element of our proposition.

Our growth plans and future success are at risk if we do not recruit and retain high calibre, talented senior management.

Mitigation

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

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

Outlook

The outcome of the EU referendum in June may have an impact on our employment of EU nationals. We need to ensure that the Group continues to be an attractive place to work particularly if employment levels continue to increase nationally and there is more competition in the job market.

Change on prior year: increased

Strategic priorities: Grow like for like, grow space and optimise footprint

Business Systems and Information Security

Description and impact

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

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

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

Mitigation

In recent years, we have made significant upgrades to our business critical systems including the implementation of SAP Financials and HR along with SAP HANA and BPC. Our warehouse management system has been replaced with JDA and core enterprise applications have been upgraded as well as the main retail website. We continue to monitor the level of activity within the Business Systems function and will respond appropriately should IT project or service delivery be at risk.

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

An information security project is ongoing to ensure that we have a good understanding of information security threats and that we have appropriate measures in place to mitigate the associated risks. Our customer loyalty scheme data is held by a specialist third party who has industry standard information security accreditations and is regularly audited. Encryption is used to protect the transmission of customer data.

Outlook

Our systems stability and reliability will continue to improve as upgrades and enhancements are implemented and new systems are adopted.

Information security risks are likely to continue to increase. We monitor this risk and will strengthen our controls as required.

Change on prior year: increased

Strategic priorities: Grow like for like

Supply Chain/Sourcing

Description and impact

During the financial year, approximately 18% of the Group's merchandise cost of goods was globally sourced, and therefore we are exposed to the risks associated with international trade, such as inflation, changing regulatory frameworks and currency exposure. We are also exposed to the risks associated with the quality and safety of products produced globally on behalf of the Group, many of which are own branded or exclusive private labels.

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

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

Mitigation

Having Pets at Home colleagues on the ground working collaboratively with suppliers enables us to monitor closely compliance with the Group's Code of Ethics and Business Conduct policy, as well as compliance with our Supplier Quality Manual. In addition, an independent third party undertakes unannounced visits to further monitor compliance with Group policies. During the year we have undertaken a group wide risk assessment to highlight any areas where we may be vulnerable to the risk of modern slavery and will strengthen our processes in the areas highlighted.

Exposure to foreign currency movements is mitigated through our hedging strategy.

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

Outlook

We continue to develop our quality assurance processes and to ensure the effectiveness of our Far East sourcing office in mitigating our sourcing risks in the region.

Change on prior year: unchanged

Strategic priorities: grow like for like, grow margins

Liquidity and Credit Risk

Description and impact

The business requires adequate cash resources to enable it to fund its growth plans through its capital projects and/or an expansion of the Group's working capital requirement.

Without adequate cash resources, the Group may be unable to deliver its growth plans, with a consequent impact on future financial performance.

Mitigation

The Group's finances are continually monitored in the context of its growth plans and a re-financing arrangement was made during the year. As a result, the Group is confident that it has adequate revolving facilities in place, with a broad syndicate of ten banks.

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

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

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

Outlook

We will continue to monitor our finances and build relationships with our finance providers. We do not anticipate any significant macroeconomic changes in the short to medium term that may affect this risk area although the outcome of the EU referendum may have some bearing.

Change on prior year: unchanged

Strategic priorities: grow space and optimise footprint

Treasury and Financial Risk

Description and impact

The Group has an exposure to exchange rate risk in respect of the US dollar that is the principal purchase currency for goods sourced from the Far East. The EU referendum in June has increased currency pressures and, dependent upon the outcome of the referendum, we may see this continue for some time. The Group also faces risks from changes to interest rates and compliance with taxation legislation. If we do not adequately manage this exposure there could be an impact on the Group's financial performance with a consequential impact on operational and growth plans.

Mitigation

This exposure to FX fluctuation is managed via forward foreign currency contracts that are designated as cash flow hedges. The Group has borrowings with floating interest rates linked to LIBOR, thereby exposing the Group to fluctuations in LIBOR and the consequent impact on interest cost. To manage this risk the Group has interest rate swaps in place that fix the interest rate on a significant proportion of the Group borrowings.

All hedging activity is undertaken by the Group Treasury function in accordance with the Group Treasury policy that sets out the criteria for counterparties with whom the Group can transact and clearly states that all hedging activities are undertaken in the context of known and forecast cashflows, with speculative transactions specifically prohibited. Dedicated tax resource is in place and specialist tax advisors are retained to assist in this area.

Outlook

Ongoing currency movements between the US dollar and GBP may result in further exchange risk, particularly in light of the forthcoming referendum. We will continue to monitor this and adjust our approach to hedging where necessary.

Change on prior year: increased

Strategic priorities: grow margin

Regulatory and Compliance

Description and impact

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

Mitigation

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

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

Outlook

We welcome the Government's recent animal establishments licensing consultation and the proposed improvements to the pet shop licensing regime. We continue to monitor this and other regulatory developments such as the new European Data Protection regulations and to plan accordingly.

Change on prior year: unchanged

Strategic priorities: grow like for like

Extreme Weather

Description and impact

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

Mitigation

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

Outlook

Further improvements to our Omnichannel offering will continue to improve our resilience to reduced store footfall during periods of extreme weather.

Change on prior year: unchanged

Strategic priorities: grow like for like

Related Party Transactions

Veterinary practice transactions

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

Commitments relating to these veterinary practices are included within notes 25 and 26 of the financial statements.

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

Goods and Services

KKR Capital Markets Ltd received fees of £500,000 (period ended 26 March 2015: £nil), relating to professional services associated with debt financing following the refinancing of the Pets at Home Group in April 2015.