Interim Results Half Year ending 31 December 2019 National - - PowerPoint PPT Presentation

Interim Results

Half Year ending 31 December 2019

National Veterinary Care Ltd | nvcltd.com.au

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,

• r 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.

Important Notice and Disclaimer

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Performance Highlights

National Veterinary Care Ltd | nvcltd.com.au

1H FY2020 Performance Highlights

1H FY2020 1H FY2019 Growth

Revenue $69.0m $53.0m +30.1% Underlying EBITDA1,2 $10.9m $8.2m +34.0% Underlying EBITDA margin 15.9% 15.3% +60bps Underlying NPAT2 $5.0m $4.1m +23.8% NPAT $4.1m $2.6m +56.4% EPS (basic) 6.10cps 4.17cps +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.

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1H FY2020 FY2019 Growth

Clinics/Businesses Owned

102 98 +4.1%

• 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
• 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

Portfolio Organic Growth

2.81% 1.58% +1.23bps

• Total portfolio organic revenue growth (LFL) of 3.29% 1 for the 6 months to 31 December 2019
• Total portfolio organic revenue growth (LFL) of 2.81% 1 for the 12 months to 31 December 2019
• Total portfolio organic revenue growth (LFL) of 1.58% 1 for the 12 months ended 30 June 2019

Best for Pet Members

27,698 25,198 +9.9%

• Wellness Program in >80 clinics (including Pet Doctors)
• Current members total 28,656, including 4,996 across the Pet Doctors Group

NPS

77.28 77.44 Target >75

• NPS consistently above target, with 11,645 surveys completed since 1 July 2019
• Positive indicator of client satisfaction

Clinics (members) in Management Services

505 426 +18.6%

• Increase driven by the acquisition of a competitor buying group Vetcentric in October 2019
• 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 periods, held for a minimum of 12 months 2 NVC management estimate of number of small animal clinics in Australia and NZ

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1H FY2020 Operational Highlights – 6 months to 31 Dec 2019

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NVC Portfolio

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Currently 103 veterinary services businesses across Australia and New Zealand

29 13 2 18 4 1 9 1 1 7 5 13 1 1 1

• clinics and veterinary services businesses
• vet training centres

NVC's portfolio

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• vet nurse training centres

Portfolio growth FY2020

Since IPO in August 2015, NVC has achieved exponential business growth within the veterinary services industry

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• 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
• f the art clinic including doggy daycare, cat boarding, grooming and coffee
• 2 merge strategy acquisitions – to secure ongoing viability and financial

performance of smaller clinics within the group and those acquired

• 7 acquisitions (including 3 merge acquisitions) have settled in FY2020 to

date, 2 remaining acquisitions (including purchase of a minority interest in an existing clinic pursuant to a put and call option agreement) are expected to settle by end of March 2020

• Currently 106 acquired/integrated businesses and 103 operated (due to 2

mergers during 1H FY2020 and 1 merger settled since 31 Dec)

• Acquisitions announced FY2020 year to date (excluding the minority

interest acquisition) are expected to deliver A$10.8M of annualised revenue and A$3.3M of annualised EBIT

• Total current owned/operated businesses is 103 – 66 in Australia, 37 in NZ

Pet Doctors Acquisition

National Veterinary Care Ltd | nvcltd.com.au

• 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 % 1H FY2020 4 FY2019 FY2018 5

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

Underlying EBITDA Margin Analysis

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EBITDA Margin – NVC (excl Pet Doctors)

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• 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

Marketing – Key Initiatives

• to increase client engagement

and increase revenue

• Online bookings implemented – delivering on convenience for clients
• Online Best for Pet sales – significant growth in existing and new client take up
• Website re-design and SEO/website traffic optimisation – large traffic increases achieved
• eDM communication direct to clinic clients – multiple touchpoints – pet lifecyles, Best for Pet, national campaigns

Clinic Initiatives

– to improve clinic performance and profitability

• Reimplementing/redesign of the clinic practice management system (poorly implemented pre NVC)
• Review of pricing and billing processes – capturing missed charges and reduced discounting
• Training on COGS management - to reduce controllable costs
• Focus on supplier compliance - to maximise rebate opportunities

People/Leadership Initiatives – for employee engagement

• Focus on peer support and forums, and manager support, for the clinics
• Dedicated NZ Vet Operations Manager to drive standards and support Veterinary Surgeons
• Leadership development program completed across NZ for Practice Managers and Lead Veterinarians
• Enforcing minimum communication and operating standards e.g. team meetings

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Pet Doctors Integration & Performance Improvement Plan

Collectively achieving strong client engagement and loyalty Collectively increasing revenue and reducing costs Collectively developing a strong culture, career development and employee engagement

NVC Clinics / Businesses

National Veterinary Care Ltd | nvcltd.com.au

Key business initiatives

• Vet managers supporting under-performing clinics to improve performance across a range of areas within the clinic
• Regular health checks and performance reviews across all areas of the business
• Focus on key cost controls – COGS and wages
• HR initiatives and recruitment strategies to build on our values and attract, engage and retain employees
• Continued professional and leadership development for employees and clinic leaders

Strategic clinic growth – mergers and greenfield

• 6 smaller Pet Doctors clinics were consolidated during FY2019 - to achieve sustainability through larger size operations
• 3 strategic merger acquisitions have been completed since 1 July 2019 in Qld, NSW and NZ
• Opening of first new greenfield clinic in September 2019 in Queensland - services include grooming, boarding, doggy daycare and

coffee sales - clients love the unique service offering in one location

Technology/system/ supplier initiatives

• Use of new real time data reporting tools to be more agile across the business
• Focus on digital marketing strategy and client touchpoints
• Online capabilities (e.g. online bookings and Best For Pet online sign ups)
• Ongoing negotiation of improved supplier arrangements for NVC
• NVC group EBITDA margin improvement of 0.5% to 15.9% in 1H FY2020
• Total portfolio organic revenue growth (LFL) of 3.29% 1 for the 6 months to 31 December 2019
• Continued focus in FY2020 on further margin improvement and other synergy opportunities
• Growth by acquisition continued during 1H FY2020

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Strong Performance in 1H FY2020

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1 Like for like sales growth reflects total portfolio’s performance, excluding strategic divestment and clinic renovation periods, held for a minimum of 12 months

• NVC’s client loyalty program is a key marketing and

revenue generating initiative

• Annual fee payable for bundled discounted services to

support overall health and wellness of pets

• Offered by more than 80 clinics – incl Pet Doctors Group

since February 2019

• Online sales functionality recently launched – has grown

significantly in the last 6 months

• Digital marketing strategy driving online sign ups by

both existing and new clients

• Other marketing initiatives include marketing content

refresh and showing clients what they have saved (or could save if not members)

• Continued growth of active clients, Best For Pet members and member % active clients
• Pet Doctors growth in members of 89% since 1 July 2019

Active clients

• f BFP Clinics

(NVC all) BFP Members (NVC all) % Active Clients (NVC all) Active clients

• f BFP Clinics

(Pet Doctors) BFP Members (Pet Doctors) % Active Clients (Pet Doctors) 30 June 2019 220,260 25,198 11.4% 48,028 2,378 4.9% 31 Dec 2019 230,903 27,698 12.0% 49,646 4,495 9.1%

NVC Pet Wellness Program –

nvcltd.com.au Members on average increase their annual spend by over 90%, while also increasing their frequency of clinic visits to realise membership benefits

Best for Pet Wellness Program Best for Pet Numbers

Online Signups Best for Pet Signups % New Clients July 2019 128 10.9% January 2020 217 34.6%

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• Over 1,200 online signups since launched in June 2019 – 19.9% are new clients
• Best for Pet eDMs have an average open rate of 53.52% (industry average 21.09%)

* An active client is a client who has been invoiced in the last 12 months

• Opening of NVC’s first new greenfield clinic in September 2019 in Queensland
• Full service clinic – pet services include grooming, cat boarding and doggy daycare and soon radiation treatment and hydro therapy
• Larger premises to accommodate doggy day care, and coffee shop
• State of the art facilities and industry leading technology implemented

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New Greenfield Clinic in QLD

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Training and Education for the Veterinary Industry

• 5 centres across Australia and New Zealand
• 3 VTC - in Brisbane, Melbourne and Christchurch
• 2 Vet Nurse Plus education centres – in Auckland – NZQA accredited veterinary nursing certificate and

diploma programs offered to up to 100 students each year

Growth Opportunities

• Opportunities to employ nurses from the Vet Nurse Plus courses – to fill vacancies & grow NZ clinic workforce
• Targeting 50% of attendees at training facilities to be non-NVC clinics/attendees (including UVG members)

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Industry Leading Veterinary Training Centres

Brisbane Melbourne Christchurch

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Growth Strategies for Management Services

• 1H FY2020 focus was the integration of Vetcentric (acquired in

September 2019) and alignment/expansion of membership offerings

• 3 levels of membership available ranging from $297 to $1,195 per

month, based on different service inclusions such as procurement, marketing, coaching and clinic management support

• Existing members will be able to upgrade membership to benefit from

the broader range of services

• Marketing services is a key opportunity – NVC has developed unique,

industry leading offerings – also providing marketing services to clients in other health sectors

• BDMs cross-selling training centre participation as well as selling broader

member services with existing members, and actively engaging with independent clinics to grow the member base

• Continue to improve supplier agreements and promotional
• pportunities for member benefit

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Management Services & Procurement – FY2020 Initiatives

NVC represents 24%1 of the small animal vet industry

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1 NVC management estimate of number of small animal clinics in Australia and NZ

Expansion of Member Services

NVC offers to independent clinic members a range of services to assist them with optimising clinic performance

Financial Performance

National Veterinary Care Ltd | nvcltd.com.au

Profit and Loss Statement – Underlying 1

1H FY2020 $’000 1H FY2019 $’000 Sales Revenue 68,533 53,432 Direct expenses (16,614) (13,095) Gross margin 51,919 40,337 Gross margin (%) 75.8% 75.5% Operating expenses 1 (40,990) (32,184) EBITDA 2 10,929 8,153 EBITDA margin (%) 15.9% 15.3% Depreciation (1,334) (987) Finance expense (1,209) (1,031) Profit before tax 8,386 6,135 PBT margin (%) 12.2% 11.5% Income tax expense (3,058) (1,675) Net profit after tax 5,328 4,460 Non-controlling interest (246) (356) Net profit after tax attributable to owners of NVL 5,082 4,104 NPAT margin (%) 7.4% 7.7% Earnings per share - basic (cents) 7.58 6.54

¹ Underlying results exclude acquisition, integration and other one-off expenses and revenues. Further, excludes the impact of AASB 16 Leases in 1H FY2020 . Refer page 19 for further details on underlying adjustments. ² EBITDA – Earnings before interest, tax depreciation and amortisation. Includes non-controlling interest.

Commentary

New accounting standard AASB 16 Leases was implemented from 1 July 2019 and has had a pervasive effect on the current half year results which is not reflected in the comparative period as the prior half year results have not been restated as part of the transition. The impact of AASB 16 has been removed from the underlying result to permit a more useful and meaningful comparison to the prior half year period. Revenue The increase in revenue during the half year was primarily driven by new 5 acquisitions, 1 new greenfield site, the full impact of prior period acquisitions (including Pet Dr Group) and organic growth of 3.29% for the half year. Gross margin % Total gross margin of 75.8% grew compared to the prior half year, which is particularly pleasing given the full 6 months dilutive impact of the NZ based Pet Dr Group acquisition in the current period versus only 3 months in the prior period. The NZ based Pet Dr group has historically operated with a higher cost base and lower margins compared to NVC. Operating expenses Operating expense growth mainly reflect the increasing scale of operations and impact of the Pet Doctors clinics for full 6 months versus 3 months in the prior period. Profitability EBITDA margin of 15.9% is at the upper end of NVC’s full year guidance range of 15.5-16.0%, and reflects margin expansion of 0.5% from full year FY2019 margin of 15.4%. The effective tax rate in the current period is impacted by increased non-deductible expenditure in the current half year and prior period under provision.

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Underlying Adjustments

Commentary

Underlying adjustments An adjustment is included in the current half year to remove the impact of new accounting standard AASB 16 Leases that was adopted on 1 July 2019 with no restatement to comparative 1H FY2019 figures. Writeback of contingent consideration (recorded as Other Revenue) of $0.498m in the current half relate to 2 clinics which were not paid due to underperformance against EBIT hurdles. Acquisition and integration costs reflect the 5 new acquisitions, 1 new greenfield site and 2 mergers during the current half year compared to 32 (including Pet Dr Group) in the prior half year period. Consistent with historical treatment acquisition and integration costs include professional fees and stamp duty, as well as the provision of a dedicated team to provide support for due diligence, settlement and systems integration. Also in the current half year are some preliminary costs associated with the proposed sale transaction of NVL to VetPartners or its nominee pursuant to the Scheme Implementation Deed as announced on 16 December 2019. Other items in the prior half year of $0.39m mainly relates to the impact of adopting new accounting standard AASB 15 which saw a one-off decreasing revenue adjustment related to the Best for Pet loyalty program.

EBITDA 1 NPAT ²

1H FY2020 1H FY2019 1H FY2020 1H FY2019 $’000 $’000 $’000 $’000 Statutory Performance 14,319 6,548 4,091 2,616 AASB 16 Leases impact (3,773) 487

• Pre-AASB 16 Performance

10,546 6,548 4,578 2,616 Writeback of contingent consideration at fair value (498)

• (498)
• Restructuring and Integration costs

365 424 365 424 Acquisition and transaction costs 516 789 516 789 Other one-off

• 392
• 392

Notional interest expense 375 232 Effective tax rate ⁴

• (254)

(349) Total Underlying Adjustments 383 1,605 504 1,488 Underlying Performance ³ 10,929 8,153 5,082 4,104

1 EBITDA – Earnings before interest, tax depreciation and amortisation. Includes non-controlling interest.

² NPAT – Net profit after tax attributable to shareholders after allowing for non-controlling interests ³ After excluding the impact of acquisition, integration, restructuring and other one-off costs and revenues. ⁴ Effective tax rate used on adjustments (excluding non-deductible stamp duty from acquisitions, capital loss on disposal of business and cost base adjustments related to contingent consideration) is 30%

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Profit and Loss Statement - Statutory

1H FY2020 $’000 1H FY2019 $’000 Revenue 69,031 53,050 Direct expenses (16,614) (13,095) Gross margin 52,417 39,955 Gross margin (%) 75.9% 75.3% Operating expenses (37,217) (31,802) Acquisition, integration and other one-off expenses and revenues (881) (1,605) EBITDA 1 14,319 6,548 EBITDA margin (%) 20.7% 12.3% Depreciation (4,329) (987) Finance expense (3,057) (1,263) Profit before tax 6,933 4,298 PBT margin (%) 10.0% 8.1% Income tax expense (2,596) (1,326) Net profit after tax 4,337 2,972 Non-controlling interest (246) (356) Net profit after tax attributable to owners of NVL 4,091 2,616 NPAT margin (%) 5.9% 4.9% Earnings per share (basic) 6.10 cents 4.17 cents

¹ EBITDA – Earnings before interest, tax depreciation and amortisation. Includes non-controlling interest.

Commentary

The 1H FY2020 results include the impact of new accounting standard AASB 16 Leases adopted on 1 July 2019 with no restatement to prior half year figures.

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Balance Sheet

1H FY2020 $’000 FY2019 $’000 ASSETS Cash and cash equivalents 18,142 19,841 Trade and other receivables 3,916 3,363 Inventories 4,500 4,222 Right of use assets 56,602

• Property, plant and equipment

10,143 9,596 Intangibles 157,216 145,859 Deferred Tax 2,105 1,885 Other 1,180 981 Total Assets 253,804 185,747 Liabilities Trade and other payables 15,311 14,930 Income Tax 1,235 471 Employee benefits 3,719 3,441 Borrowings 63,081 54,821 Deferred consideration 11,254 10,965 Revenue received in advance 2,359 2,496 Lease liability 57,074 236 Provision for make good 613

• Total Liabilities

154,646 87,360 Net Assets 99,158 98,387 Shares on issue 67,141,626 67,001,366

Commentary

Cash Cash reserves at balance date remain strong, with surplus cash available for growth initiatives and or debt reduction. Working capital Net working capital changes largely reflect the acquisition growth during the half year. Right of Use Asset & Lease Liability Represent the impact of new accounting standard AASB16 Leases, together with a newly recognised make good provision of $0.613m. Debt Drawn $63.1m of core debt facility ($85.0m) with EBITDA leverage at 2.15x (net). The debt facility and cash reserves provides significant headroom to fund future acquisitions and other growth initiatives. Deferred consideration Modest growth since June reflecting the acquisitions during the period less earnouts paid or written back.

1 Bank Facility basis

1H FY2020 $’000 FY2019 $’000 Debt metrics Net debt 44,939 34,980 EBITDA leverage 1 2.15 1.97

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Cash Flow Statement

1H FY2020 $’000 1H FY2019 $’000 Proforma & Underlying EBITDA 1 10,929 8,153 Other non-cash items 356 146 Changes in working capital 2 1,499 (2,190) Underlying Operating Cash Flows (pre-tax, ungeared) 12,783 6,109 Conversion (%) 117% 75% Ungeared, pre-tax operating cash flows - Underlying 12,783 6,109 Acquisition, integration and other one-off costs (881) (1,223) Reclassification of lease payments under AASB 16 2,245

• Ungeared, pre-tax operating cash flows - Statutory

14,147 4,886 Net finance costs paid (2,722) (903) Income tax paid (2,040) (2,089) Net cash from operating activities 9,385 1,894 Net payments for purchase of businesses 3 (11,229) (33,168) Net payments for purchase of non-controlling interests (1,449)

• Net payments for plant and equipment

(1,697) (1,158) Proceeds on sale of business

• 641

Net cash used in investing activities (14,375) (33,685) Net proceeds from share issue (3) 17,518 Net proceeds from borrowings 8,218 18,244 Repayment of lease liabilities (2,247)

• Dividends/net loans paid members and minority interests

(2,633) (2,072) Net cash from financing activities 3,335 33,690 Net increase in cash and cash equivalents 1,655 1,899

¹ EBITDA – Earnings before interest, tax depreciation and amortisation. Includes non-controlling interest. Excluding acquisition, integration and other one-off expenses. ² Excludes income tax and finance costs ³ Includes payments for contingent consideration

Commentary

Operating Operating cash flows during the period were primarily driven by trading conditions and favourable net working capital changes (timing) delivering EBITDA cash conversion of 117% during the half. Looking forward, NVL expects EBITDA cash conversion to be in the range of 95-100%. Investing Primarily relates to the 5 acquisitions during the year plus 1 new greenfield site opened, compared with 31 acquisitions in the prior period (including Pet Dr). Financing Financing cash flows reflect $8.2m net debt drawn to fund business acquisitions, less dividends paid and lease liability payments (AASB 16).

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New Lease Accounting Standard AASB 16

Commentary

Profit and Loss Statement

New accounting standard AASB 16 Leases was implemented from 1 July 2019 and has had a pervasive effect on the current half year results which is not reflected in the comparative period as the prior half year results have not been restated as part of the

• transition. The Proforma result removes the

impact of AASB 16 from the statutory result. Whilst reported EBITDA has increased under AASB16, net profit has decreased due to the additional depreciation and finance costs associated with the lease assets and liabilities newly recognised under the standard.

Cash Flow

There is nil net effect on the consolidated statement of cash flows as a result of adopting AASB 16, as operating lease payments have continued to be paid as previously, however the cash outflow of $2.245 million has been reclassified from

• perating to financing activities.

1H FY2020 $’000 AASB 16 Impact $’000 Proforma 1H FY2020 $’000 1H FY2019 $’000 Revenue 69,031 69,031 53,050 Direct expenses (16,614) (16,614) (13,095) Gross margin 52,417 52,417 39,955 Gross margin (%) 75.9% 75.9% 75.3% Employee benefits (30,176) (30,176) Occupancy costs (1,307) (3,773) (5,080) Other operating expenses (5,734) (5,734) (31,802) Acquisition, integration and other one-off items (881) (881) (1,605) EBITDA 1 14,319 (3,773) 10,546 6,548 EBITDA margin (%) 20.7% 15.3% 12.3% Depreciation (4,329) 2,996 (1,333) (987) Finance expense (3,057) 1,473 (1,584) (1,263) Profit before tax 6,933 696 7,629 4,298 PBT margin (%) 10.0% 11.0% 8.1% Income tax expense (2,596) (209) (2,805) (1,326) Net profit after tax 4,337 487 4,824 2,972 Non-controlling interest (246) (246) (356) Net profit after tax attributable to owners of NVL 4,091 4,578 2,616 NPAT margin (%) 5.9% 6.6% 4.9% Earnings per share (basic) 6.10 cents 6.83 cents 4.17 cents

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Commentary

Balance Sheet

AASB 16 has resulted in an overall decrease in net assets during the half year as the newly recognised lease liabilities and associated provision for make good

• utweigh the right of use lease asset.

1H FY2020 $’000 AASB 16 Impact $’000 Pro forma 1H FY2020 $’000 FY2019 $’000 ASSETS Cash and cash equivalents 18,142 18,142 19,841 Trade and other receivables 3,916 3,916 3,363 Inventories 4,500 4,500 4,222 Right of use assets 56,602 56,602

• Property, plant and equipment

10,143 10,143 9,596 Intangibles 157,216 157,216 145,859 Deferred Tax 2,105 209 1,896 1,885 Other 1,180 1,180 981 Total Assets 253,804 56,811 196,993 185,747 Liabilities Trade and other payables 15,311 15,311 14,930 Income Tax 1,235 1,235 471 Employee benefits 3,719 3,719 3,441 Borrowings 63,081 63,081 54,821 Deferred consideration 11,254 11,254 10,965 Revenue received in advance 2,359 2,359 2,496 Lease liability 57,074 56,685 389 236 Provision for make good 613 613

• Total Liabilities

154,646 57,298 97,348 87,360 Net Assets 99,158 (487) 99,645 98,387 Shares on issue 67,141,626 67,141,626 67,001,366

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New Lease Accounting Standard AASB 16

Growth Strategy & Outlook

National Veterinary Care Ltd | nvcltd.com.au

NVC has three core growth platforms, each with attractive returns and significant runway remaining as it strives to increase its market share.

1. Organic Growth of veterinary services – improved performance of existing businesses 2. Growth by Acquisition – strategic acquisitions that geographically and culturally complement NVC 3. Growth of Management Services and Procurement Division – leveraging NVC services and systems

Organic Growth

• Expansion of the Wellness Program – Best for Pet
• Enhancing standards of care by upskilling of veterinary professionals through the Veterinary Training Centre
• Benchmarking of clinical standards across practices to identify training opportunities and optimise service
• fferings
• In-house provision of more complex services to reduce external referrals outside of NVC

Growth by Acquisition

• Significant opportunity for further industry consolidation in the veterinary services sector due to

the fragmented nature of the industry, and the changing characteristics of the veterinary workforce

Growth of Management Services and Procurement

• Leveraging NVC’s strong buying power and systems
• Unique clinical training offerings through NVC’s Veterinary Training Centre
• Providing support to smaller independent clinics (approx. 2,600 clinics in Australia and New Zealand)
• Providing bespoke service offerings and support to corporate groups in the health sector

Growth Strategy

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FY2020 Guidance

• Underlying revenue expected to be above $140 million (growth of 20% above FY2019 underlying revenue)
• Underlying EBITDA margin expected to be 15.5-16.0%
• Excludes the impact of AASB 16 Leases

The FY2020 full year guidance remains unchanged and is:

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VetPartners scheme proposal to acquire NVC shares

Scheme of Arrangement with VetPartners

• On 16 December 2019, NVC announced that it had entered into a binding scheme implementation deed with

Australian Veterinary Owner’s League Pty Ltd trading as VetPartners under which it is proposed that VetPartners (or its nominee) will acquire 100% of the issued share capital of NVC by way of scheme of arrangement (the Scheme) for $3.70 per share in cash.

• To date the following has occurred in relation to the Scheme:
• The Supreme Court of Queensland has made orders convening a meeting of NVC shareholders to consider

and vote on the proposed transaction (the Scheme Meeting)

• Registration by ASIC of an explanatory statement providing information about the Scheme, the Independent

Expert Report and notice of the Scheme Meeting (together, the Scheme Booklet)

• Distribution to NVC Shareholders of the Scheme Booklet on 18 February 2020
• Waiver of the Foreign Investment Review Board condition on 20 February 2020
• The Scheme Meeting will be held in Brisbane on 19 March 2020.
• Subject to meeting certain pre-conditions, including shareholder approval, the proposed transaction is expected to

settle in early April.

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Board and Management

National Veterinary Care Ltd | nvcltd.com.au

Dr Alex Whan GM Vet Se

Services

Dr Alex has over 15 years of veterinary service experience, having practiced veterinary medicine in both Australia and overseas, including experience with both large and small animals. Alex was previously the Lead Veterinarian and Practice Owner at Brunswick Central Veterinary Clinic in Melbourne, having established the clinic and growing it into a multiple million-dollar business.

Jason Beddow Chief Fin

Financial Offic icer

Jason is the CFO of NVC and has extensive experience in senior financial roles with private equity and listed companies within the healthcare and pharmaceutical sectors. Jason has also previously held roles in audit and advisory with Deloitte. Jason was previously the CFO of ASX- listed mining products and services business, PPK Group Limited.

Roy Walker GM Operations Australia

Roy has a strong background in the veterinary industry, having held senior management roles within Greencross Ltd, where Roy was responsible for managing the group and state

• perations teams. Roy was also previously the Senior Operations Manager at one of

Australia's largest childcare service providers, G8 Education Ltd.

Paula Sadler GM Marketing and Managed Services

Paula joined NVC with a strong background in senior marketing management roles with experience in both publicly listed and private companies across animal health, entertainment, sport, retail and a large full service marketing agency. Paula has a strong background in customer relationship marketing, marketing strategies, digitally-led and integrated marketing communications.

Gillian Porter GM

GM Human Resources

Gillian comes from a HR background within the hospitality industry, working with a number

• f large multisite restaurant groups, including the Jamie Oliver brands. Gillian has strong

experience in start-up sites, workforce planning, talent acquisition, process improvement and system implementation.

James Terry GM Operations New Zealand

James has worked in the Animal Health Industry for over 27 years, most recently as the General Manager of Provet New Zealand. James has extensive experience in leadership and strategic planning roles.

Janita Robba Company Secretary and Commercial Manager

Janita has extensive financial, governance and commercial experience. Janita is a Chartered Accountant and has worked with listed and unlisted companies across a range of industries, including in senior management roles at Flight Centre Limited and Unity Pacific Group. Tomas is the founding CEO and MD of NVC who brought together the initial portfolio of 34 clinics and took the company to listing on the ASX in August 2015. Over the past three years he has more than doubled the business to a thriving market leading organisation comprising more than 100 veterinary businesses, including 3 vet training facilities, 2 vet nurse training centres and complementary managed services.

Tomas Steenackers Managing Director and Chief Executive Officer Sarah McNeil GM Str

Strategic Projects

Sarah has a strategic projects focus as well as commercial initiatives across the group. Sarah joined NVC with significant experience in practice management systems, technology projects and a legal background.

Senior Management

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Susan Forrester Chair and Non

• n-Executive Director

Tomas Steenackers Managing Director and Chief Executive Officer Kaylene Gaffney Non

• n-Executive Director

Susan is a highly respected and accomplished professional company director with a powerful blend of management, board and consulting experience across ASX-listed, public and private companies. She draws on 30 years of expertise spanning the legal and professional services, healthcare, childcare and telecommunications sectors to bring a practical and pragmatic approach to her board contributions. She is currently a director of ASX listed entities G8 Education Ltd, Over the Wire Ltd and Viva Leisure Ltd. Tomas is the founding CEO and MD of National Veterinary Care Ltd who brought together the initial portfolio of 35 clinics and took the company to listing on the ASX in August 2015. Over the past four years he has more than doubled the business to a thriving market leading organisation comprising of more than 100 veterinary clinics supported by 5 training facilities and complementary managed services. Before founding NVC, he gained extensive senior management experience in the veterinary, health, pharmaceutical and pathology sectors. Kaylene has had a career in senior financial roles for over 25 years in the retail, aviation, telecommunications and information technology sectors. She currently holds a senior executive financial role with Super Retail Group Limited. Kaylene has previously served as a non-executive director of ASX listed MSL Solutions Limited, a non-executive director and Chair of the Audit and Risk Committee for Wotif.com and in 2016, she served as Queensland State Chair of Chartered Accountants Australia and New Zealand. Kaylene is Chair of NVC’s Audit and Risk Committee.

Board of Directors

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Thank You

National Veterinary Care Ltd | nvcltd.com.au