Finance charges leave Pets at Home in the red

PETS at Home made a £53m pre-tax loss last year after shouldering finance-related charges of £89.3m.

The Handforth-based group published figures for the year to March in August but they did not include a pre-tax measure of profit which is detailed in accounts for parent company KKR My Best Friend UK Finco, just filed at Companies House.

Instead, the company drew attention to earnings before interest, tax, depreciation and amortisation (EBITDA), seen as a key indicator of performance in a private equity-owned company. Pets at Home was acquired by buyout giant KKR in early 2010 for £955m.

On the EBITDA measure the group saw profits rise nearly 10% to £100.8m, buoyed by new store openings to a total of 350 and the acquisition of a vets business. Sales grew 10% to £598.3.

The accounts show that the company made an operating profit of £36m, up from £30m last time but this was wiped out by interest charges associated with more than £1bn of debt – some £600m in loan notes from KKR and £436.6m in bank debt. The pre-tax loss of £53m was down on a loss of £58m in the year to March 2012.

The loan notes are repyable by 2040 unless the company is sold or floated on the stock market. In November Sky News said Pets at Home could float as early as the first quarter of 2014 and that it had hired several investment banks to advise on a potential £1.5bn listing.

In the year to March like-for-like sales growth was 2.2%, an improvement on the 1.3% reported last time. The gross margin was static at 52%.