EBOS GROUP LIMITED — Investor Presentation 2014

Aug 26, 2014

EBOS Group Ltd

Full Year Results for the Year ended 30 June 2014 Investor Presentation

Mark Waller Executive Director Patrick Davies Chief Executive Officer John Cullity Chief Financial Officer

August 2014

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Disclaimer

The information in this presentation was prepared by EBOS Group Ltd with due care and attention. However, the information is supplied in summary form and is therefore not necessarily complete, and no representation is made as to the accuracy, completeness or reliability of the information. In addition, neither the EBOS Group nor any of its subsidiaries, directors, employees, shareholders nor any other person shall have liability whatsoever to any person for any loss (including, without limitation, arising from any fault or negligence) arising from this presentation or any information supplied in connection with it.

This presentation may contain forward-looking statements and projections. These reflect EBOS’s current expectations, based on what it thinks are reasonable assumptions. EBOS gives no warranty or representation as to its future financial performance or any future matter. Except as required by law or NZX or ASX listing rules, EBOS is not obliged to update this presentation after its release, even if things change materially.

This presentation does not constitute financial advice. Further, this presentation is not and should not be construed as an offer to sell or a solicitation of an offer to buy EBOS Group securities and may not be relied upon in connection with any purchase of EBOS Group securities.

This presentation contains a number of non-GAAP financial measures, including Gross Profit, Gross Operating Revenue, EBIT, EBITA, EBITDA, Free Cash Flow, Interest cover, Net Debt and Return on Capital Employed. Because they are not defined by GAAP or IFRS, EBOS’s calculation of these measures may differ from similarly titled measures presented by other companies and they should not be considered in isolation from, or construed as an alternative to, other financial measures determined in accordance with GAAP. Although EBOS believes they provide useful information in measuring the financial performance and condition of EBOS's business, readers are cautioned not to place undue reliance on these non-GAAP financial measures.

The information contained in this presentation should be considered in conjunction with the audited consolidated financial statements for the year ended 30 June 2014, which are available at:

http://www.ebosgroup.com/investor-information.php

All currency amounts are in New Zealand dollars unless stated otherwise.

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Overview FY14

• Financial results include the performance of Symbion for the full 12 months to 30 June 2014

• Excellent underlying Group financial results and cash flow recorded for the year

• Australian Healthcare businesses performed strongly and are well positioned for further growth

• HBL contract to run the New Zealand national hospital supply chain now executed

• Management changes now in place and the combined business is structured for future growth

• Bank debt successfully refinanced post balance date at improved margins and extended terms

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EBOS Group today Trans Tasman Healthcare and Animal care business portfolio

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Animal
Healthcare
Care
Pharmacy Contract Sales & Hospital & Consumer Pharmacy Pet Care &
Wholesale Logistics Marketing Homecare Products Retail Vet
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Where are we today :

• EBOS is the largest diversified Australasian marketer, wholesaler, distributor of healthcare, medical and pharmaceutical products, and a leading animal care products distributor and marketer

• EBOS holds market leading positions across many industry segments

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Financial Results Summary Major increase in operating earnings and cash flow

NZ $m	FY 2014	FY 2013	Var %
Revenue	5,760.1	1,823.2	216%
EBITDA	178.2	58.2	206%
EBIT	155.7	51.8	200%
Profit before Tax	125.8	42.2	198%
Net Profit After Tax	92.1	28.2	226%
EPS - cps	62.8	46.8	34%
Operating cash flow	114.2	26.4	332%
Net Debt / EBITDA	1.8 x	3.0 x
ROCE ¹	12.8%

• FY14 results include Symbion for the full 12 month period

• EPS growth of 34% demonstrates the benefits of the Symbion acquisition

• Operating cash flow of $114.2m takes the business to a new level

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¹ ROCE measured as earnings before interest, tax and amortisation of finite life intangibles divided by capital employed

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Geographic information Major shift in earnings to Australia post Symbion acquisition

Revenues

(12 months to Jun 2014)

EBITDA

(12 months to Jun 2014)

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New New
Zealand Zealand
22% 20%
Australia
Australia
78%
80%
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Earnings sensitivity to Currency

• Appreciation in NZD v AUD over the last 12 months has significantly impacted on NZD translated earnings

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NZD v AUD Exchange rate
1.000
0.950
NZ / AUD
Fx rate
0.900
30 June 2012 0.783
30 June 2013 0.847
0.850 30 June 2014 0.933
0.800
Average rate FY13 0.801
Average rate FY14 0.905
0.750
0.700
Jul-12 Dec-12 Jun-13 Dec-13 Jun-14
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FY14 Earnings Sensitivity to Currency

• 80% of Group earnings (EBITDA) are generated in AUD

	(A) 1,280.0 35.4 NZ Trading Operations NZ$ m	(B) 4,054.4 0.905 4,480.0 129.3 0.905 142.9 Aus Trading Operations AUD m Average NZ/AUD rate¹ Aus Trading Operations NZ$ m	(A)+(B)
NZ $m	NZ Trading Operations NZ$ m	Aus Trading Operations AUD m Average NZ/AUD rate¹ Aus Trading Operations NZ$ m	Consolidated NZ$ m
Revenue	1,280.0	4,054.4 0.905 4,480.0	5,760.1
EBITDA	35.4	129.3 0.905 142.9	178.2

• EBITDA sensitivity to a 1 cent movement in NZD / AUD exchange rate is $1.6m

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¹ Average rate rounded to 3 decimal places

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Segment earnings overview EBITDA NZ$ million

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Animal care
153.1
16%
FY14 mix ¹
Healthcare
49.1
84%
29.4
18.7
(9.5)
(4.2)
Healthcare Animal care Corporate ² Animal care
28%
FY14 FY13
FY13 mix ¹
Healthcare
•
Earnings mix of the business has further concentrated on Healthcare 72%
post the Symbion acquisition
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• 1 EBITDA excluding Corporate costs

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• 2 Corporate costs in FY13 included costs associated with the acquisition of Symbion ~$6m

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Segment & Divisional Overview FY14 Gross Operating Revenue ¹ contribution

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Healthcare 85%
Hospitals
12%
Healthcare
Logistics 9%
Sales &
Mktg 10%
Pharmacy
45%
Consumer
& Retail 9%
Animal care
15%
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¹ Gross operating revenue (GOR) comprises Gross Profit and Other Revenue

• Within both Operating Segments, there is a diversified mix of business units all contributing to the overall strong result

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Healthcare Segment Financial Results

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HEALTHCARE GEOGRAPHIC SPLIT - FY14

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New Zealand,
23%
Revenue
Australia, 77%
New Zealand,
20%
EBITDA
Australia, 80%
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NZ $m	FY 2014 FY 2013	Var %
Revenue	5,418.4 1,652.5	228%
EBITDA	153.1 49.1	212%
EBIT	134.0 44.1	204%
	2.8% 3.0%
EBITDA / Revenue %		(0.1%)

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Healthcare Segment Additional segment analysis – Australia & NZ

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Healthcare Revenue mix Healthcare GOR ¹ mix
Consumer &
Retail Pharmacy Pharmacy
53%
1% 61%
Sales &
Consumer &
Marketing
Retail
Hospitals
4%
10%
15%
Hospitals
Healthcare
Healthcare 28%
Logistics
Logistics Sales &
6%
Marketing
11%
11%
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• EBOS has a unique spread of Healthcare businesses across Australia and New Zealand serving pharmacy, hospitals, manufacturers and consumers

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¹ Gross operating revenue (GOR) comprises Gross Profit and Other Revenue

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Healthcare Segment Summary of Performance

• Australian pharmacy business FY14 sales revenue (AUD) was flat when compared to the prior corresponding period (pcp). This is a positive outcome given the Australian Government’s PBS Price reforms. Excluding this impact, adjusted AUD pharmacy sales revenue growth would have been +3.8%

• Post balance date, agreement was reached for EBOS Group to take a strategic 25% investment in the Good Price Pharmacy Warehouse business (GPPW). Transaction is expected to complete by end August 2014 and will add to FY15 earnings

• Australian Hospitals business maintained its marketing leading position

• Chemmart opened 28 new stores in FY14 with membership now 328 stores

• Endeavour Consumer health business performed strongly with double digit sales growth on the pcp, with further growth achieved across the Faulding product portfolio

• Healthcare Logistics performed strongly across both NZ & Aus, with revenue and earnings growth from increased activity with Pharmaceutical manufacturers

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Healthcare Segment Summary of Performance

• New Melbourne Distribution centre (pictured) built and ready to go-live in September 2014

• Onelink signed contract with HBL to run the New Zealand national hospital supply chain

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Animal Care Segment Financial Results

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ANIMAL CARE GEOGRAPHIC SPLIT - FY14
New Zealand,
17%
FY 2014 FY 2013 Var %
Revenue
NZ $m
Revenue 338.9 169.5 100%
Australia, 83%
EBITDA 29.4 18.7 58%
EBIT 25.9 17.2 51%
EBITDA / Revenue % 8.7% 11.0% (2.3%) New Zealand,
38%
EBITDA
Australia, 62%
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Animal care Segment Summary of Performance

• Animal care business delivered a solid result in FY14

• EBOS’ JV share of Animates net profit increased ~$1.0m on LY, reflecting a stronger trading position and store growth

• Symbion’s Lyppard vet business grew in line with the market

• Continue to explore opportunities for expansion in the sector

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Operating cash flow Strong operating cash flow achieved in FY14

ating cash flow g operating cash flow achieved in FY14	ating cash flow g operating cash flow achieved in FY14
NZ $m FY 2014 FY 2013 Var $ Var %
EBITDA 178.2 58.2 120.0 206% Interest paid (29.9) (9.6) (20.3) 211% Tax paid (29.6) (13.5) (16.2) 120% Net working capital and Other movements (4.5) (8.7) 4.2 48%
Cash from Operating activities 114.2 26.4 87.8 333%
Capital expenditure (net) (30.5) (3.3) (27.2) (835%)
Free Cash Flow 83.7 23.1	60.6 263%

• EBOS has an excellent portfolio of strong cash generating businesses

• Focus on tight working capital management is evident in the FY14 cash flow performance

• Majority of FY14 capex spend was on the new Melbourne Distribution centre that will go live in September 2014

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Capital Management

• Strong working capital management disciplines are a key focus of the group

• Working • Trading terms of customers will continue to be

• capital managed, as will inventory levels

• • Industry leading cash conversion cycle of 25 days

	FY 2014
Debtor Days	45
Inventory Days	35
Creditor Days	(55)
Cash Conversion Cycle	25

• Net Debt / EBITDA reduced from 3.0x at June 13 to 1.8x at June 14

• Interest cover now at 6.5x

• Debt • Debt facilities renegotiated post balance date at extended terms and improved margins

• Ample headroom in debt facilities to undertake further M&A

Dividends

Dividends

• Final dividend of 20.5 cents per share (total 41 cents, pcp 32.5c) imputed to 35%

• • Total FY14 dividend payout ratio 66%

• DRP continues including a 2.5% discount

• • Zuellig will participate in the DRP up to the maximum amount allowable under the sale agreement

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Debt Facility Limits Maturity Profile Negotiated August 2014

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450
400
350
300
250
200 413
150
100
50 91 83 93 94
0
FY16 FY17 FY18 FY19 FY20
Cash Advance Facilities Term Debt Securitisation
NZ$ m
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• NZD 413m (AUD$385m) Securitisation facility renegotiated post balance date to a new 3 year term expiring FY18 on improved margins

• Term debt of NZD$270m extended post balance date on improved margins

• Debt facility split : 80% Australia, 20% NZ

• Undrawn committed facilities NZD$369m

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Corporate Governance and Leadership changes Transition plans complete

• Management transition plan announced in February 2014 now in place

• Mr Rick Christie – Chairman EBOS, will retire at the AGM in October 2015

• Mark Waller - Executive Director with primary focus on M&A for the next 12 months will assume role of EBOS Chairman in October 2015

• Patrick Davies is the new CEO for EBOS Group

• Dennis Doherty has retired as CFO for EBOS Group effective August 2014

• John Cullity is the new CFO for EBOS Group

• Revised executive management structure in place

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Shareholder value creation EBOS’ continued focus

Well-positioned businesses

• Diversified earnings across multiple segments

• Market leading positions and scale

• Operational excellence

Strong operating profits and a portfolio of strong cash generating businesses

• EBOS has the strength in its balance sheet to invest for growth

• EBOS to maintain a disciplined approach to acquisition by :

• Leveraging experience in assessing and integrating businesses aligned with group objectives

• Focus on targets that deliver required rates of return

Attractive long-term demand in Healthcare and Animal care markets

• EBOS committed to innovation and investment to generate earnings growth

• Demographics will continue to drive long-term demand in Healthcare markets

Experienced management team with a strong track record of delivering results

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