nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Pets At Home Vets Group Investor & Analyst Presentation October 2014
nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Introduction Nick Wood CEO 1
nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx The importance of Vet Services to the Group Part of our unique ‘one stop shop’ offering for engaged pet owners Vet practices in-store drive store footfall & LFL Efficient use of store space We are growing share & consolidating a growing market Vet practice income is a fast growing revenue stream for the Group Vet services accretive to Group operating margins 2
nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx We are pet people – our love of pets is shared with customers, vets and colleagues We are pet people Customer Vet & Colleague Love of pets engagement engagement 3
nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx The combined strength of our unique offering R ational + Emotional = 4
nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Afternoon timetable Management & Executive Team presentation on Vets Group business 1. Veterinary Market 2. Pets At Home Vets Group business 3. Vet Partner recruitment 12.30 – 15.30 4. Our JVPs, hear their stories Q&A session, comfort break 5. Vet practice economics 6. Pets At Home economics Final Q&A and wrap up Depart for vet practice tours 15.45 Visit to Sydenham or Blackheath in-store veterinary practices Sydenham 10 minute drive (bus provided), Blackheath 5 minute walk 16.00 – 16.45 Vet practice tours (return bus to Greenwich station from Sydenham available) 17.00 Finish 0 5
nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx The team Nick Wood, CEO Amanda Radford, Vets Group CFO Joined as CEO in June 2012. Previously CEO of Joined Vets Group in 2014. Previously Director American Golf for 4 years and 10 years of Group Finance at TalkTalk and Head of management at Dixons Reporting at Serco Group Plc Ian Kellett, CFO Graeme McConnell, Head of JV Partnerships Joined as CFO in April 2006. Previously Deputy Joined Vets Group in 2005. Previously Regional Finance Director at JD Wetherspoon Plc Development Manager for Specsavers, involved in the rollout of their JV model Sally Hopson, Vets Group CEO Mark Welch, Operations & People Director Joined in December 2008. Previously spent 14 Joined the Group in 2013. Previously based in years at Asda as Retail Operations Director and the leisure industry, specialising in developing Marketing Operations Director business partnerships Andrei Balta, Vets Group Commercial Director Tom Mowlem, JV Partner Joined as Commercial Director in December 2012. JV Partner at two Vets4Pets practice, Previously Strategy Director for PAH Group for 2 Bournemouth and Christchurch. Joined years & management consultant at Bain&Co for 7 Companion Care in 1998 years Leigh-Anne Brown, JV Partner JV Partner at Vets4Pets practice in Harrogate. Joined the Group in 2008 6
nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Veterinary services market & our position Andrei Balta Vets Group Commercial Director 7
nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Vet services are a core growth element of the UK pet market: resilient through downturn, future forecast growth is higher UK Pet Market Vet Services: Historic growth driven by drug Future growth from greater insurance, pricing & treatment complexity humanisation, & increasing procedure range CAGRs CAGRs £1.9bn Vet Services 3.2% 1.4% £1.6bn £1.5bn Accessories £0.9bn 2.6% 1.3% £0.7bn £0.8bn £0.7bn 3.9% £2.6bn Food 2.4% £2.2bn £2.0bn 2008 2012 2017E Source: OC&C market data & forecasts 8
nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx UK vet market is highly fragmented, we have an opportunity to consolidate the market 55% of practices in the UK dedicated to small animal Corporates c25% share of fragmented market 3000 100% Farm Emergency 90% Equine 2500 SA Hospital 80% 70% 2000 Other 60% SA Practice 1500 50% 40% 1000 30% Goddards 20% PaH General 500 (VetGroup) Vets Now, 10% Medivet, IVC CVS 0% 0 Source: RCVS 2013. Represents 52% of all registered veterinary premises Source :2014 PAH estimates, Company data 9
nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Key drivers of vet services market suggest growth can be expected to continue Veterinary market growth Number of pets Vet spend per pet Humanisation Other channels Online channels represent small Increasing availability of UK cat and dog population Treating a pet as one of the erosion of prescription drug sales complex procedures stable family & desire to provide top level care c. 7% veterinary pharma Economy growth drives Dogs: c.9m sales are online increased insurance & out of pocket spend Cats: c.9m UK Vet Services Market Growth 2008-2012 £33m £1,603m £51m £1,518m £1m 1,570 1,518 1,519 2008 Spend on Treatment Spend on Prescription Spend on Prescription 2012 Market Size Fees Medication (In Vets) Medication (Online) Market Size 10 Source: OC&C, GfK
nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Increasing insurance coverage & claim size suggests spend on pet health care will continue to grow UK pet insurance market expected to continue to Size of average claim increased 52% to c.£600 in 2012 experience strong growth Average premium and average claim on UK pet insurance policies £1.2bn £700 ABI estimates £1.1bn 15% pet £600 owners are insured today £1.0bn £500 £0.9bn 52% £400 £0.8bn £0.7bn £300 £0.6bn £200 34% £0.5bn £100 £0.4bn £0 £0.3bn 2007 2008 2009 2010 2011 2012 £0.2bn Average claim (£) Average premium (£) 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: Association British Insurers Source: Association British Insurers 11
nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Pets At Home Vets Group is the largest small animal veterinary services provider in UK, growing faster than competitors UK Veterinary Market Share By Value £2.0bn £1.8bn £1.6bn £1.4bn £1.2bn Other £1.0bn Other Other £0.8bn £0.6bn £0.4bn Goddards Vets Now Goddards Medivet Goddards Independent Vetcare CVS £0.2bn CVS CVS PAH Vets Group PAH Vets Group PAH Vets Group £0.0bn 2012 2013 2014 Source: 2012 OC&C data, 2013-2014 PAH estimates. PAH Vets Group share 2012 includes Vets4Pets practices 12
nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx We are experiencing rapid organic growth, opening new instore & standalone practices Pets At Home Vets Group, Number Of Practices 303 277 Added 92 for Vets4Pets 121 acquisition 208 119 Standalone 97 In-store 92 182 73 5 158 4 111 87 69 FY11 FY12 FY13 FY14 H1 FY15 13
nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx We understand what veterinary customers want, and we perform well against these criteria All Respondents: Key Purchase Criteria Vet group (n=496) We perform in line with competitors on Non-branded (n=1781) criteria most important to customers And perform ahead of competitors on criteria most important to new owners 14 Source: PAH Vets Group Customer Insights 2014
nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx Veterinary clients are extremely loyal; we understand & target the main switching points Encouraging people to change However we have been more ~90% of vet users use only one practice vet is extremely challenging successful at this than competitors % users who have switched to practice % vet users who use only one practice in last 2 years What would make you consider 30% changing vet? 100% 92% If I had a bad experience 56% 90% 25% 25% If my pet seemed unhappy 33% 80% If I didn’t like a new vet 21% 70% 20% I would never consider 19% 60% changing 15% Cheaper prices 17% 50% If my vet surgeon moved 13% 40% 10% 9% If someone else had a bad 10% 30% experience 20% If a new practice opened at 7% 5% nights and weekends 10% If a new practice was 5% recommended by a friend 0% 0% Vet Group Non branded If I got a new pet 2% N 2,777 N 473 2,019 15 Source: PAH Vets Group Customer Insights 2014 and 2013
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