Interim Results Half Year ending 31 December 2019 National Veterinary Care Ltd | nvcltd.com.au
Important Notice and Disclaimer Future Statements Except for historical information, there may be matters in this presentation by National Veterinary Care Ltd (the Company) that are forward-looking statements. Such statements are based on management figures and are estimates only. Forward-looking statements, which are based on assumptions and estimates and describe the Company’s future plans, strategies, and expectations are generally identifiable by the use of the words ‘anticipate’, ‘will’, ‘believe’, ‘estimate’, ‘plan’, ‘expect’, ‘intend’, ‘seek’, or similar expressions. Investors should not place undue reliance on forward-looking statements. By its nature, forward-looking information involves numerous assumptions, inherent risks and uncertainties both general and specific. There can be no guarantee that such estimates, forecasts, projections and other forward-looking statements will eventuate. Those risks and uncertainties include factors and risks specific to the Company and the industry in which the Company operates, as well as general economic conditions and prevailing exchange rates and interest rates. Each of the risks, if it eventuates, may have a material adverse impact on the Company’s operating performance and profits, and the market price of its Shares. Actual performance or events may be materially different from those expressed or implied in those statements. All forward-looking statements attributable to the Company or persons acting on behalf of the Company are expressly qualified in their entirety by this section. Except as expressly required by law, the Company has no obligation to publicly update or revise any forward-looking statements provided in this publication whether as a result of new information, future events or otherwise, or the risks affecting this information. None of the Company, its officers or any person named in this publication with their consent, or any person involved in the preparation of this publication, makes any representation or warranty (express or implied) as to the accuracy or likelihood of fulfilment of any forward-looking statement except to the extent required by law. The forward-looking statements reflect the views held only as at the date of this presentation. nvcltd.com.au 2
Performance Highlights National Veterinary Care Ltd | nvcltd.com.au
1H FY2020 Performance Highlights 1H FY2020 1H FY2019 Growth $69.0m $53.0m Revenue +30.1% $10.9m $8.2m Underlying EBITDA 1,2 +34.0% 15.9% 15.3% Underlying EBITDA margin +60bps $5.0m $4.1m Underlying NPAT 2 +23.8% $4.1m $2.6m NPAT +56.4% 6.10cps 4.17cps EPS (basic) +1.9cps ▪ Strong revenue growth >30% ▪ Underlying EBITDA margin of 15.9% at the upper end of full year guidance range (excluding AASB 16 impact) ▪ Expanded network with acquisition of 4 clinics plus 1 buying group and opening 1 greenfield clinic ▪ Acquisitions in 1H FY2020 – expected to deliver AU$6.8M pa revenue and $2.2M pa EBIT ▪ Entered into Scheme Implementation Deed with VetPartners to acquire 100% of NVL for $3.70 per share ¹ EBITDA – Earnings before interest, tax depreciation and amortisation (non-IFRS Information). Includes non-controlling interest. 2 Underlying results excludes acquisition, integration and other one-off items. In addition, it excludes the impact of new Accounting Standard AASB 16 Leases. Refer to page 18 for further details on Underlying results. nvcltd.com.au 4
1H FY2020 Operational Highlights – 6 months to 31 Dec 2019 1H FY2020 FY2019 Growth • 5 acquisitions in 1H FY2020 in Aust and NZ – 4 clinics, 1 buying group – total acquired to Dec 2019 of 104 • 1 greenfield site opened in Queensland Clinics/Businesses 102 98 +4.1% Owned • 2 clinics acquired in 1H FY2020 were merge strategy resulting in 102 clinics currently owned by NVC • 2 further clinics settled by late February 2020 • Total portfolio organic revenue growth (LFL) of 3.29% 1 for the 6 months to 31 December 2019 Portfolio Organic 2.81% 1.58% +1.23bps • Total portfolio organic revenue growth (LFL) of 2.81% 1 for the 12 months to 31 December 2019 Growth • Total portfolio organic revenue growth (LFL) of 1.58% 1 for the 12 months ended 30 June 2019 • Wellness Program in >80 clinics (including Pet Doctors) Best for Pet Members 27,698 25,198 +9.9% • Current members total 28,656, including 4,996 across the Pet Doctors Group • NPS consistently above target, with 11,645 surveys completed since 1 July 2019 NPS 77.28 77.44 Target >75 • Positive indicator of client satisfaction • Increase driven by the acquisition of a competitor buying group Vetcentric in October 2019 Clinics (members) in 505 426 +18.6% Management Services • NVC will represents approx. 24% 2 of the Aust & NZ small animal market through NVC and MS clinics 1 Like for like sales growth reflects total portfolio’s performance, excluding strategic divestment and clinic renovation perio ds, held for a minimum of 12 months 2 NVC management estimate of number of small animal clinics in Australia and NZ nvcltd.com.au 5
NVC Portfolio Since IPO in August 2015, NVC has achieved exponential business growth within the veterinary services industry Portfolio growth FY2020 NVC's portfolio • Currently 103 veterinary services businesses across Australia and New Zealand Vetcentric (GPO) acquisition in October 2019 – strategic for enhanced managed services member offerings and increased supplier buying power • Greenfield clinic opened in Townsville in September 2019 – full service state 2 13 of the art clinic including doggy daycare, cat boarding, grooming and coffee 5 • 2 merge strategy acquisitions – to secure ongoing viability and financial performance of smaller clinics within the group and those acquired 29 1 1 • 7 acquisitions (including 3 merge acquisitions) have settled in FY2020 to 1 date, 2 remaining acquisitions (including purchase of a minority interest in 7 an existing clinic pursuant to a put and call option agreement) are expected 2 13 to settle by end of March 2020 1 9 • Currently 106 acquired/integrated businesses and 103 operated (due to 2 18 1 mergers during 1H FY2020 and 1 merger settled since 31 Dec) 1 4 • Acquisitions announced FY2020 year to date (excluding the minority interest acquisition) are expected to deliver A$10.8M of annualised revenue - clinics and veterinary services businesses - vet training centres and A$3.3M of annualised EBIT - vet nurse training centres • Total current owned/operated businesses is 103 – 66 in Australia, 37 in NZ nvcltd.com.au 6
Pet Doctors Acquisition National Veterinary Care Ltd | nvcltd.com.au
Underlying EBITDA Margin Analysis • NVC businesses (excluding Pet Doctors) have maintained strong margins from FY2019 into 1H FY2020 • Margin improvement in the Pet Doctors Group has contributed to overall NVC margin growth of 0.5% in 1H FY2020 • Analysis based on 1H FY2020 (excluding AASB 16 Leases impact) and FY2019 (Pet Doctors for 9 months only since acquisition) EBITDA Margin – NVC (excl Pet Doctors) 1H FY2020 4 FY2018 5 EBITDA Margin % FY2019 NVC (excl Pet Doctors) 2 17.3% 17.2% 16.2% - Pet Doctors 12.6% 3 11.1% 1 Total NVC 15.9% 15.4% 16.2% 1 actual performance for the 9-month period Oct18-Jun19 excluding support office and disposed Pet Post online business 2 NVC Group excluding Pet Doctors (includes other non-Pet Doctors acquisitions) 3 actual performance for the 6-month period Jul19-Dec19 excluding support office 4 Underlying result for current half year excludes the impact of new accounting standard AASB 16 Leases 5 Pet Doctors was acquired on 1 October 2018 and was not part of the NVC group in FY2018 nvcltd.com.au 8
Pet Doctors Integration & Performance Improvement Plan • A key focus during FY2019 was business integration and cultural alignment of leaders and clinics teams • Improved performance during 1H 2020 was driven by a range of NVC business and clinic initiatives • Online bookings implemented – delivering on convenience for clients Marketing – Key Initiatives • Online Best for Pet sales – significant growth in existing and new client take up - to increase client engagement • Website re-design and SEO/website traffic optimisation – large traffic increases achieved and increase revenue • eDM communication direct to clinic clients – multiple touchpoints – pet lifecyles, Best for Pet, national campaigns Collectively achieving strong client engagement and loyalty 9 • Reimplementing/redesign of the clinic practice management system (poorly implemented pre NVC) Clinic Initiatives • Review of pricing and billing processes – capturing missed charges and reduced discounting – to improve clinic performance and profitability • Training on COGS management - to reduce controllable costs • Focus on supplier compliance - to maximise rebate opportunities Collectively increasing revenue and reducing costs • Focus on peer support and forums, and manager support, for the clinics People/Leadership Initiatives • Dedicated NZ Vet Operations Manager to drive standards and support Veterinary Surgeons – for employee engagement • Leadership development program completed across NZ for Practice Managers and Lead Veterinarians • Enforcing minimum communication and operating standards e.g. team meetings Collectively developing a strong culture, career development and employee engagement nvcltd.com.au 9
NVC Clinics / Businesses National Veterinary Care Ltd | nvcltd.com.au
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