®
The Ralph Veterinary Referral Centre
Plc (‘The Ralph’) is a new unlisted public
company set up to develop a state-ofthe-art multidisciplinary small animal
specialist veterinary referral hospital
in the M4-M40 corridor.
Investor Information Memorandum:
EXECUTIVE SUMMARY
BEFORE WE BEGIN…
IMPORTANT NOTICE
The content of this promotion has not been approved by an authorised person
within the meaning of the Financial Services and Markets Act 2000. Reliance on
this promotion for the purpose of engaging in any investment activity may expose
an individual to a significant risk of losing all of the property or other assets invested.
Any individual who is in doubt about the investment to which this document relates
should consult an authorised person specialising in advising on investments of the
kind in question.
By receiving this document and in consideration of it being issued, the recipient
warrants that he/she falls within one of the following categories of person in the
Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (which
thereby renders this communication exempt from the general restriction in section
21 of the Act):
To be self-certified an individual must meet one of the following criteria:
a) Article 19: Investment Professionals. This includes authorised persons; persons
whose ordinary activities involve him in carrying on the controlled activity to
which the communication relates for the purpose of the business carried on by
him; persons who it is reasonable to expect will carry on such activity for the
purposes of a business carried on by him.
iii) Be working or have worked in the prior 2 years in a professional capacity in
the private equity sector or the provisions of finance for small and medium
enterprises;
b) Article 48: Certified High Net Worth Individuals. Such an individual must have
signed the requisite statement relating to his net worth within the last 12 months;
to be a certified high net worth individual an individual must meet one of the
following criteria:
i) Had annual income in the preceding financial year of at least £100,000;
ii) Had net assets throughout the preceding financial year of at least £250,000
(excluding primary residence and certain other assets).
c) Article 49: High Net Worth Companies. This includes body corporates with
a called up share capital or net assets of not less than £500,000 where it or
its parent undertaking has more than 20 members, otherwise £5 million; any
unincorporated association or partnership which has net assets of not less than
£5 million.
d) Article 50: Sophisticated Investors. Such an investor must have a requisite
certificate signed by an authorised person to the effect that he is sufficiently
knowledgeable to understand the risks associated with this type of investment
and must have signed a requisite statement within the last 12 months declaring
that they qualify under this exemption.
e) Article 50A: Self-certified Sophisticated Investors. Such an individual must have
signed the requisite statement within the last 12 months.
i) Be a member of a network or syndicate of business angels for at least six months;
ii) Have made more than one investment in an unlisted company in the prior two
years;
iv) Are or have been in the 2 years prior a director of a company with an annual
turnover of at least £1 million.
If you are in any doubt about whether the investment described in this document
is suitable for you, you should seek a personal recommendation from an authorised
person specialising in advising on investments of this kind.
The price, value or income of or from securities may fall and you may lose all of the
capital that you invest in The Ralph. Investments in unquoted companies are not
readily realisable or transferable and you may not be able to realise your investment
when you want to do so. This document may contain projections and information on
past performance. Neither past performance nor projections are a reliable indicator
of future results.
This document is provided to you in strict confidence. You are not permitted,
unless required to do so by law, to use the information in this document for any
purpose except that of investing in The Ralph or advising in relation to the same.
No representation or warranty is made by The Ralph (or any of its directors,
officers, employees or agents) as to the information and opinions contained in this
document.
Please note that an investment in The Ralph can only be made after an
investor has received the full Information Memorandum and completed an
original application form. This document does not constitute an offer for
shares or an offer or inducement to engage in any investment activity.
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3
Growth market - purchases of top tier referral centres by venture capital
INVESTMENT IN SPECIALIST VETERINARY REFERRAL HOSPITAL
Staffed by Board-certified Diplomates, The Ralph
Veterinary Referral Centre Plc (‘The Ralph’) will aim to
offer the second largest referral Emergency and Critical
Care (‘ECC’) service in the UK alongside other key clinical
disciplines such as Orthopaedics, Soft Tissue Surgery,
Internal Medicine and Neurology & Neurosurgery amongst
others. The Ralph will also offer a Primary Care Out-ofHours service to surrounding primary care practices on an
opt-in basis.
firms over the last two-three years demonstrates clear confidence in the veterinary
referral sector
Growth in Pet Insurance - 85% of referral practice business is made
up of insurance cases. Value of pet insurance market is expected to increase by 46.7%
between 2015-2019
Growth of referral ECC caseload - the largest ECC
provider has consistently experienced a significant increase in caseload year on year
Experienced team - with strong clinical, financial and operational
experience
Enterprise Investment Scheme - advance assurance was
obtained from HM Revenue & Customs on the 22 January 2016, allowing investors to
claim EIS relief
Secured referral stream - independent veterinary professionals
in the hospital’s catchment area will be incentivised to refer their cases to The Ralph
by being offered a direct investment opportunity and an additional share-based referral
incentive scheme.
Exit - projected in year four to deliver a targeted amount of £1.54 per 70p of net EIS
investment cost
The Ralph is seeking to raise £3.7m in equity,
by offering up to 26.4m new Ordinary ‘A’ Shares
at a price of 14p per share.
Minimum subscription is £9,800 per investor
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5
BUSINESS DESCRIPTION
At launch The Ralph
will offer the second
largest referral ECC
service in the UK
The Ralph is a new unlisted public company that will operate a state-of-the-art
multidisciplinary small animal specialist veterinary referral hospital with the second
largest Emergency and Critical Care (ECC) service in the United Kingdom. The
hospital will be located along the M4-M40 corridor.
The Ralph will be staffed by Board-certified Diplomates. At launch it aims to offer the
second largest referral ECC service in the UK alongside key clinical services such as
Orthopaedics, Soft Tissue Surgery, Internal Medicine and Neurology & Neurosurgery
amongst others. The hospital will also offer a Primary Care Out-of-Hours service to
surrounding primary care practices on an opt-in basis.
The Ralph aims to be a top tier tertiary referral centre on
a par with, and indeed at times exceeding, both Universitygrade small animal hospitals and a very small number of
other comparable private referral centres. Geographically
the nearest centres considered to be significant competitors
are an hour’s drive away and only one of the competitors
currently has a specialist ECC service embedded in a
large multidisciplinary hospital. Independent veterinary
professionals in the hospital’s primary catchment area will
be offered an equity investment opportunity.
In keeping with its ethical core values, The Ralph will work closely with a new affiliated
charity, operating from within the premises, to provide low cost basic and specialist
health care to stray, shelter and other eligible companion animals.
The Ralph’s charity affiliation will:
›› substantially benefit the reputation of the for-profit business
leading to increased referrals
›› raise income from providing services to charity cases, albeit
for a reduced fee
›› enhance staff morale and retention in a vocational sector
A possible partnership with the nearby Berkshire College of Agriculture is also
currently under discussion.
Specialist veterinary referral hospital
Located along the M4-M40 corridor
2nd largest referral ECC service in the UK
All key clinical services
A top tier tertiary referral centre
Ethical core values - charity, sanctuary
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7
Growth of Business Sector:
THE SMALL ANIMAL REFERRAL SECTOR
The Ralph aims to be the top of the pyramid of
small animal veterinary services. This segment of
the market has the following key characteristics:
p
Purchases of top tier referral centres by venture capital firms over the last two
to three years demonstrates clear confidence in the growth of the veterinary
referral sector
p
Two significant independently owned referral hospitals in the region increased
turnover by 11% (from £9.15m to £10.11m) and by 43% (from £6.6m to £9.4m)
between March 2014 and March 2015
p
The Pet Food Manufacturers’ Association 2015 annual report estimates that
12 million UK households have pets, with 8.5 million dogs and 7.5 million cats.
Available data suggests that many of these are to be found in south-east England
Growth in Pet Insurance:
p
85% of referral practice business is now made up of complex/expensive
insurance cases (Onswitch, 2014)
p
The total value of the UK pet insurance market is expected to increase by
46.7% between 2015-2019, rising from £987 million to £1.45 billion with the
market topping the £1 billion mark for the first time in 2016 (Key Note Market
Report on Pet Insurance, 2014)
p
Between 2010-2014, the number of cats covered by pet insurance increased by
13.9% and the number of insured dogs by 28.3% (Key Note Market Report on
Pet Insurance, 2015)
Growth of referral ECC service:
p
The largest referral ECC service in the UK has consistently experienced a
significant increase in caseload year-on-year
p
2 independently owned referral hospitals in
the region increased turnover by 11% and 43%
p
UK pet insurance market is expected to
increase by 46.7%
p
The Ralph aims to offer the second largest referral ECC service in the UK
alongside key clinical services such as Orthopaedics, Soft Tissue Surgery,
Internal Medicine and Neurology & Neurosurgery amongst others
p
The Ralph will offer the second largest referral
ECC service in the UK alongside key clinical
services
p
An increasing proportion of referral cases are acute presentations versus more
elective or chronic disorders. The Ralph will be very well placed to service this
growing demand
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9
MANAGEMENT TEAM & SPECIALISTS
The Ralph will retain the services of The Ralph
Project Limited – a Management Company led by
Shailen Jasani and Iqbal Dhanji whose biographies
are noted on the following pages. They have
significant experience in healthcare, strategy,
finance and operational management.
Subject to HM Revenue & Customs approval, Enterprise Management Incentive
(EMI) share options will be granted to recruit and retain an appropriate team of
specialists, some of whom have already committed to joining The Ralph – see table
below. These EMI share options, of 250,000 per specialist, will be capable of being
exercised from years four to ten of being granted.
After much research into the best location and available
properties for The Ralph, we are currently in negotiations to
establish the most suitable of the two we have shortlisted.
Specialist clinical service
Number of Specialists
required at launch
Specialists Confirmed1 Further options within
S Jasani’s close
professional network
Emergency & Critical Care
2.5
1.5
3
Soft Tissue Surgery
1.5
1.5
2-3
Orthopaedics
1
1
2-3
Internal Medicine
1
02
2-3
Neurology & Neurosurgery
1
1
1-2
0.5
0.5
2-3
Ophthalmology
1
02
1-2
Diagnostic Imaging
1
1
2-3
Anaesthesia
1
02
2-3
Cardiology
1. Subject to Terms & Conditions
2. None approached as yet to protect confidentiality
A Hospital General Manager and a Customer Care Manager have already provisionally
accepted roles at The Ralph. EMI share options will also be granted to these senior managers.
Accomplished progressive Board-certified Diplomates
Familiar names, well-known regionally
Shared culture of ethical best practice with compassion
and integrity
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11
Yr 2
Yr 3
Yr 4
Yr 5
PROFIT & LOSS
Revenue
Funding required (£)
Funded by (£)
Building improvement2,000
, 000
Fixtures, Fittings & Equipment6 8 2, 000
Working Capital8 20, 0 1 7
Deposit for lease & Contingency399,983
A Shares
3, 850, 000
B Shares52, 000
940,156
3,833,194
6,280,503
7,961,059
10,467,569
110,344
549,656
551,513
700,425
933,900
829,813
3,283,538
5,728,991
7,260,634
9,533,669
TOTAL3, 902, 000
HR costs
699,496
2,901,680
3,431,790
4,629,437
5,204,561
Investment terms
Establishment & Admin
costs
244,652
759,145
1,002,773
1,042,630
1,130,323
(377,287)
1,294,428
1,588,567
3,198,785
Cost of Sales
Gross Profit
Overheads
Set up costs
52,000
EBITDA
(166,336)
Yr1
Yr 2
Yr 3
Yr 4
Yr 5
Fixed Assets
2,000,000
1,900,000
1,805,000
1,714,750
1,629,013
682,000
545,600
436,480
349,184
279,347
2,682,000
2,445,600
2,241,480
2,063,934
1,908,360
Cash
812,665
399,983
1,640,726
3,082,025
6,267,202
Debtors
204,531
373,351
525,938
704,497
795,399
Total current assets
1,017,196
773,334
2,166,663
3,786,521
7,062,601
Fixtures, fittings &
Equipment
Total fixed assets
Current Assets
Current liabilities
Creditors
(36,468)
96,957
195,857
227,148
304,443
Total current liabilities
(36,468)
96,957
195,857
227,148
304,443
1,053,664
676,378
1,970,806
3,559,373
6,758,159
Net current assets
Net Assets
3,735,664
3,121,978
4,212,286
5,623,307
8,666,518
Share capital
3,902,000
3,902,000
3,902,000
3,902,000
3,902,000
(166,336)
(780,022)
310,286
1,721,307
4,764,518
3,735,664
3,121,978
4,212,286
5,623,307
8,666,518
Reserves
Shareholders funds
3, 902,000
Investors will subscribe for Ordinary ‘A’ shares at 14p per share. On exit or wind-up of
the Company, the Ordinary ‘A’ shares and ‘B’ shares shall receive the amounts paid up
on such shares. Ordinary ‘A’ shares will be paid up as to £0.14 under the Offer and ‘B’
shares are paid up as to £0.001. Thereafter all Ordinary ‘A’ shares and ‘B’ shares shall
rank equally on a return of capital.
It is not expected that dividends will be paid in the first three years and in any case, no
dividends will be declared without shareholder approval.
BALANCE SHEET
Building improvements
ILLUSTRATIVE FINANCIAL PROJECTIONS & FUNDING
Yr1
Shareholdings
Shares
Ordinary ‘A’ shares
27,500,000
34.6%
Ordinary ‘B’ shares
44,050,000
55.4%
Referral Incentive Scheme (‘B’ shares)
3,975,000
5.0%
Small Animal Charity (‘B’ shares)
3,975,000
5.0%
79,500,000
100.0%
TOTAL
The share-based referral incentive scheme will be facilitated by allocating founders’
Ordinary ‘B’ shares. The Royal College of Veterinary Surgeons (professional regulatory
body) was consulted prior to offering this scheme.
Exit and returns for shareholders
For those who wish to exit after the three year EIS minimum holding period from the
start of trading, the Company will seek to achieve an exit which could take the form of
a Management Buyout or a trade sale. It is expected that the Company will be valued
at either a multiple of EBIDTA or at net assets plus goodwill, of approximately £10m in
2020. In this case, investors would receive the amount subscribed (3.85m/£0.14 per
share) and 34.6% of the remaining £6.15m (i.e. £2.13m), equivalent to 7.7p for every
14p subscribed. The total projected return to investors is therefore 21.7p for every 9.8p
of net investment cost. This represents a multiple of over two times on the net cost of
investment after 30% income tax relief over four years.
* No corporation tax likely to be payable during the period due to start up losses and Capital Allowances
Warning: The above returns are set out for illustrative purposes only. The projections above may not be a
reliable indicator of future performance. No warranty as to future outcome is implied or should be inferred.
%
July 2016
Subscription
EXIT PROCEEDS
Oct 2020
(100)
Tax relief
Net cost
Jan 2017
(100)
Total
(100)
30
30
30
(70)
154
154
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13
ABOUT US
Shailen Jasani* MA VetMB MRCVS DipACVECC
Iqbal Dhanji* MBA BSc FCA
Veterinary Emergency and Critical Care Specialist
Chief Operating Officer and Finance Director
Chief Executive Office and Clinical Director
Shailen graduated from the University of Cambridge in 1999 and after three years
in primary care general veterinary practice commenced a career in Emergency and
Critical Care (ECC).
He worked as an emergency veterinary surgeon in the primary care sphere
between 2003-2006 and as a clinical trainer, supervisor and mentor for Vets Now
Ltd, overseeing multiple primary care emergency clinics in the south of England
between 2010-2013.
Shailen has spent six of the last twelve years working at the The Queen Mother
Hospital for Animals, Royal Veterinary College, in various capacities including
Senior Faculty clinician.
Since July 2014, he has been working on plans for The Ralph while focusing also on
providing ECC education to primary care colleagues in various formats.
Shailen personally founded and manages or is otherwise integral to a number of
veterinary and animal-related projects:
• The Ralph Site, a non-profit pet loss support online resource founded after
the passing of Shailen’s cat, Ralph
• Veterinary ECC Small Talk, ECC educational material aimed predominantly
at colleagues in primary care practice
• VetFOAMed, a database of free open access veterinary educational
resources
• The Veterinary Nomenclature (VeNom) Coding Group, oversees and
manages clinical data for coding to facilitate research
Shailen has considerable experience in clinical supervision and training and
in providing Continued Professional Development in various formats. He has
published in peer-reviewed literature, is the sole author of a book on Small Animal
Emergency Medicine, and has very recently released an Emergency Medicine App.
Shailen has been a Trustee/Director for The Mayhew Animal Home, London since 2011.
Following a degree in Computer and Management Sciences from the University
of Warwick, Iqbal qualified as a Chartered Accountant with Coopers & Lybrand
(now PwC) in London, gaining exposure to both publicly listed and privately
owned companies in a broad spectrum of industries. He then joined the
International Audit Team at Bank of America before pursuing an MBA at London
Business School.
Since his MBA, Iqbal has been the Chief Operating Officer of Naaz Investments
Limited – a UK company with a portfolio of hotels, car dealerships and a
business importing and distributing car spare parts in Portugal and Russia; the
Finance Director of Mochron Investments Limited – a company that developed
a banking solution for the unbanked in South Africa with rights to the World
Trade Centre brand for several cities in sub-Saharan Africa; and with his wife,
developed a portfolio of dental practices in the UK.
Iqbal has until March 2016 served as a trustee of Exhibition Road Cultural Group
whose aim is to develop and raise the profile of South Kensington as a worldclass centre of learning, innovation and inspiration in the arts and science.
Iqbal has spent many years serving in a voluntary capacity within the Ismaili
community. He has served as a Member of the Ismaili Council for the UK with
responsibility for all the community’s Outreach engagements with Government,
Heads of Missions and leaders of faith communities.
He has also served for ten years initially as a member and later as the Chairman
of the National Conciliation and Arbitration Board; as the Honorary Secretary
of the community’s Grants and Review Board where he was heavily involved in
budget and strategy reviews and management audits; and been responsible for
leading congregational prayers at one of the community’s centres in London.
Iqbal now spends his time as a Business Angel, working with young,
ambitious businesses that want to grow and develop into World Class organisations.
*Services to be provided via a Management Company (The Ralph Project Limited)
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15
I’ve been telling people at my practices that they need to refer to
The Ralph when it opens, explaining why it is going to be better
than the referral centres they use at the moment - they all seem
really keen, so hopefully within a year or so you’ll be up and running
and clients will be queueing at the door!
THE PROPERTY
Some of the feedback received since
announcing plans for The Ralph:
I would like you
to know that I
wish you the very
best and…I will
most certainly
encourage the
team here to refer
out to The Ralph in
the future.
Ashley, London-based
Practice Manager
Mel, London-based small animal veterinary surgeon
I was so impressed and pleased to hear
about your plans. I know that others in the
profession, as well as myself, would welcome a
practice like the one you are hoping to build…
I wish you the best of luck with the project,
it is something I feel is sorely needed in our
profession. I look forward to hearing more in
the future.
I have considered Shailen and Iqbal’s business plan and think it is a
great concept with a sound basis for success. I have known Shailen for
over 12 years and have come to appreciate his passion for providing top
level healthcare to pets, in particular Emergency and Critical Care…
With the support of Iqbal to oversee the financial element, this is an
independent team that is bound to succeed.
Julia, Bedford-based veterinary surgeon and Clinical Director
Eliza, Watford-based small animal veterinary nurse
The Ralph looks really cool!
Will be great to have somewhere
at referral level with compassion
as a core value.
Cathy, Kent-based veterinary surgeon
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17
RISKS AND SENSITIVITY
Please read the important notice on the opening page
of this document. Risks are also highlighted at various
points in this document. There may be additional risks
that the directors of the Company are not aware of or
have not correctly assessed.
The Company’s business strategy depends on the ability
of the Company to successfully execute the business
plan to set up and run a multidisciplinary small animal
specialist referral hospital as described. If there are
any delays or other factors outside the control of the
Company, this may have a materially adverse effect upon
the trading performance and value of the Company and
ultimately upon the value of its Shares.
Any delays in securing the appropriate premises and/or
in the refurbishment of the premises to make it ready
for use may impact returns. The Company is reliant on
its contractor to deliver the premises within an agreed
time frame. It is also dependent on the strength of its
contractor. As far as possible, risks will be passed to its
contractor and the Company will cover risks such as
specification changes.
The Company’s future success is substantially
dependent on the ability to recruit and retain the
relevant Specialists and staff. The Company cannot give
assurances that the Specialists recruited will remain
with the Company, although the Company believes that
it’s remuneration package will be attractive and the
Specialists and staff will be committed to the long term
success of the Company. The loss of service of any of
the Specialists and other key employees could damage
the business of the Company
The illustrative financial projections in this document
are based on The Ralph being referred a certain number
of average cases per specialist per week and achieving a
certain average income per case.
SAPPHIRE CAPITAL PARTNERS LLP TERMS
The Company will pay Sapphire an arrangement fee
of 2% of the amount of share capital subscribed by
investors introduced by Sapphire and an arrangement
fee of 1% of the amount of share capital subscribed by
investors not introduced by Sapphire.
ENTERPRISE INVESTMENT SCHEME
The Ralph has obtained advanced assurance from
HM Revenue & Customs on 22 January 2016, that its
ordinary shares are qualifying investments under the
Enterprise Investment Scheme (EIS).
By subscribing for EIS shares under the offer, you may be
able to:
›Reclaim
›
30p for every £1 subscribed against your
income tax bill. By reducing the cost of an investment,
this rebate can enhance your returns. The rebate can’t
be more than your total income tax bill. The rate of
income tax you pay is not relevant;
›Roll-over
›
£1 of capital gains for every £1 subscribed,
deferring 28p of CGT that would otherwise be
payable. This applies to gains made on shares, property
or other assets in the three years before and the year
after you subscribe. Any deferred gains are “forgiven”
at death, so your heirs receive the shares at their
market value at death free of any CGT liability. If you
sell the EIS shares, any deferred gains crystallise, so
CGT will be payable unless you can offset the deferred
gain against capital losses or annual CGT allowances;
›Enjoy
›
gains free of CGT. If you sell the shares after
holding them for at least three years, any capital gain
over the £1 invested is free of tax;
›Save
›
40p in inheritance tax on every £1 of value held
at death and for two years before, if your other net
assets are more than the £325,000 tax free allowance.
This saving would be more or less, depending on
whether the shares are worth more or less than you
subscribed.
›Off-set
›
any loss which might be incurred on the
shares (sale proceeds less net cost) against your
taxable income or gains in the year of loss, if any.
If you rolled over a capital gain when investing, the
deferred gain is reduced by any loss. These reliefs
potentially reduce your exposure to loss to less than
40% of your investment;
The amount of EIS reliefs depends on how much you
invest and on how much tax you would otherwise pay.
With the maximum reliefs, you could save or defer up
to 58p of tax for every £1 invested. Taking inheritance
tax into account, a total saving of up to 98p or more is
possible for every £1 invested.
Information about taxation contained in this document
may not be relevant to your circumstances. It is of a
general nature and is based on current UK legislation,
rules and practice, which may change. Any such changes
and in particular, any changes to bases of taxation, tax
relief and rates of tax, may affect the availability of
reliefs and the value of an investment in the company.
WARNING:
Warning: The tax benefits of EIS investing depend on your personal tax situation and on you making the appropriate filings
with HM Revenue & Customs . You must not be connected to the Company or receive value from it other than a normal
level of dividends. The benefits also depend on whether the Company remains compliant with the EIS rules, as well as on
tax rates and on complex rules and regulations. You could lose tax benefits that you expected to enjoy and you might have
to repay some or all of the income tax relief you receive, together with interest. If you defer a capital gain by investing in
EIS shares, and tax rates subsequently increase, your liability to capital gains tax could be higher than it would have been at
the time you invested.
®
Why ‘The Ralph’ ?
Ralph was an adorable rescue cat that Shailen helped to treat after he (Ralph) was hit by a
car in 2008. They went on to spend two years sharing a home together before Ralph passed
in 2010. It was in his memory that Shailen set up The Ralph Site (theralphsite.com), a nonprofit online pet loss community that supports countless carers through the bereavement
process. The site is complemented by a public Facebook page, which now has over 41,000
followers, and a thriving private Facebook group.
‘What stands out above all else is my
emphasis on compassion for animals
and their human families, on ethical
practice, on caring for staff, and on
good old TLC!’
Shailen Jasani MA VetMB MRCVS DipACVECC
A well-known Veterinary Emergency & Critical Care
Specialist, Educator and leading UK Veterinary influencer
Potential Investors are welcome to contact us for any
clarification. For general enquiries email Shailen Jasani,
[email protected] or for investment enquiries
email Iqbal Dhanji, [email protected]