EBOS GROUP LIMITED — Investor Presentation 2018

Nov 13, 2018

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INVESTOR DAY 14 November 2018

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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’ 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, EBITDA, Underlying EBITDA, NPAT, Underlying NPAT, Underlying Earnings per Share, Free Cash Flow, Net Debt and Return on Capital Employed. Because they are not defined by GAAP or IFRS, EBOS’ 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' 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 consolidated financial statements for the period ended 30 June 2018.

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

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2

Introduction and Group Overview John Cullity, EBOS Group CEO

AGENDA AGENDA

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Healthcare Brett Barons, CEO Symbion

Consumer Brands Sean Duggan, CEO Animal Care & Consumer Brands Financial Overview Shaun Hughes, CFO

Positioned for Future Growth John Cullity, EBOS Group CEO Site tour – new Brisbane facility

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3

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Introduction and Group Overview John Cullity, EBOS Group CEO

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GROUP INTENT

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EBOS will focus on delivering shareholder value through disciplined investments in a diverse portfolio of health and animal care related activities. Together with our trading partners, we will play an important role in the delivery of health outcomes to the community and we aspire to hold leading positions in the sectors we participate in.

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5

EBOS GROUP TODAY

Diversification within Healthcare and Animal Care is a key signature of our approach

HEALTHCARE

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ANIMAL CARE

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COMMUNITY INSTITUTIONAL CONTRACT CONSUMER PRODUCT & VET RETAIL PHARMACY HEALTHCARE LOGISTICS PRODUCTS BRANDS WHOLESALE

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6

EXECUTIVE LEADERSHIP TEAM

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Chief Executive Officer John Cullity CEO Animal Care & Chief Financial Chief Information Group Human Executive General CEO, Symbion General Counsel Consumer Brands Officer Officer Resources Officer Manager, Strategy Brett Barons Janelle Cain Sean Duggan Shaun Hughes Andrea Bell Tim Goldenberg David Lewis

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7

EBOS STRATEGIC APPROACH

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Our Healthcare and Animal Care strategic focus is centred on

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Leading Market Positions

Investing for Growth

Disciplined Capital Management

We aim to have positions of scale in the markets we operate in and maximise opportunities across our wide range of businesses wherever possible.

Two types of investments:

• Acquisitions: we have a successful track record of deal execution. EBOS has completed 20 deals since 2000.

• Internal Capex: investment to lift productivity, manage costs and deliver better customer service.

• Cash generation to drive scope for further investment which allows for dividends to be paid in the range of 60-70% of Net Profit After Tax.

• Acquisitions and new business focus on supporting the Group’s return on capital employed.

We focus on delivering profitable growth and superior returns

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8

LEADING MARKET POSITIONS

EBOS Group is the largest and most diversified Australasian marketer, wholesaler and distributor of healthcare, medical and pharmaceutical products. It is also a leading marketer and distributor of recognised consumer products and animal care brands.

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Combined pharmacy and hospital pharmaceutical wholesaler in Australia and New Zealand

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Hospital pharmaceutical wholesaler in Australia and New Zealand

No.1

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To be the #1 Community Pharmaceutical wholesaler in Australia from July 2019 following the commencement of trading with the Chemist Warehouse Group

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3PL/4PL Pharmaceutical provider in New Zealand. Full range of services in Australia.

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Pharmacy wholesaler in New Zealand

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Comprehensive distribution network in the animal care market, with pet brands, speciality retail outlets in NZ, and a leading veterinary wholesaler.

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9

EBOS M&A APPROACH

• Our M&A activity aligns with our strategy.

• We buy value accretive businesses with strong management teams and solid prospects for further growth.

• We are disciplined in the prices we will pay for businesses and aim to enhance the Group’s ROCE >15%.

 Board provides valuable oversight of all M&A activity.

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10

INVESTING FOR GROWTH RECENT TRANSACTIONS

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• Acquisition of the minority shares in TerryWhite Group Limited , expected to complete by 31 December 2018.¹

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• Acquisition of Warner & Webster (31 Aug 2018). A medical & surgical supplies wholesaler with operations in Victoria and South Australia.

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• Acquisition of Ventura Health (April 2018). Management company of Australian pharmacy retail group.

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• Acquisition of Gran’s Remedy (March 2018). New Zealand leading foot care consumer health brand.

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• 14% investment in ASX listed, MedAdvisor Ltd (October 2017). Australia’s leading digital medication management company.

• HPS (June 2017) leading provider of outsourced pharmacy services to Australian Private Hospitals.

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¹ Subject to approval of TWG minority shareholders and satisfaction of other conditions

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Healthcare Brett Barons, CEO Symbion

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HEALTHCARE MANAGEMENT TEAM

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CEO, Symbion
Brett Barons
Executive GM, Pharmacy Executive GM,
Executive GM, Contract GM Wholesale & Retail
and Institutional Operations & Supply CFO, Symbion
Logistics Services
Healthcare Chain
Sharon Papworth
Michael Broome Sab Ambroino
Stuart Spencer Simon Bunde
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13

HEALTHCARE DIVISIONAL SUMMARY

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Primary care /
Customer Community Pharmacy Hospitals Manufacturer
Aged care
Wholesale Retail Contract Logistics
Core 2
Brands &
Service
Offering
Additional
valued
services
1
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¹ EBOS has a 14.1% shareholding in Medadvisor as at 30 June 2018. ² EBOS has a 25% shareholding in GPPW as at 30 June 2018.

CHEMIST WAREHOUSE TENDER WIN

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• In July 2018, EBOS won the tender to act as the exclusive third party distributor of pharmaceutical products to more than 450 stores in Australia.

• EBOS expects to enter into a five-year supply agreement, to take effect from 1 July 2019, with the potential for an extension of a further 3 years.

• EBOS estimates that sales to the Chemist Warehouse Group (CWG) stores will generate approximately A$1 billion in revenue in the first full year of the agreement.

• The increase in ethical sales volumes is estimated to increase our share of CSO funding from ~ one-third to over 40%.

• EBOS acts as CWG’s wholesaler in New Zealand.

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NEW BRISBANE WAREHOUSE

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• High volume pharmaceutical facility – ~10,000m[2 ]

• World class storage and picking systems

• Highly efficient pick to person technology

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16

PRODUCTIVITY GAINS FROM INVESTMENTS

Significant productivity and cost improvements are expected from the new Brisbane warehouse consistent with our investment in automation at Sydney and Melbourne. Volume increases from 1 July 2019 will further improve productivity in all warehouses across Australia.

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VIC
opened
October 2014 Warehouse Productivity comparison: VIC vs QLD
VIC QLD
Oct-14 Feb-15 Jun-15 Oct-15 Feb-16 Jun-16 Oct-16 Feb-17 Jun-17 Oct-17 Feb-18 Jun-18
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~+50% VIC productivity above old QLD site

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17

HEALTHCARE LOGISTICS

Logistics solutions to a GMP Pharmaceutical standard to Healthcare companies for their warehousing, distribution and related services in Australia and New Zealand.

Customers

• Pharmaceutical manufacturers (including generics & specialty).

• Medical consumables.

• Medical devices.

• Consumer products.

• Facilities

• Auckland (x2), 16,000m².

• Sydney, 25,000m².

Services

• 3PL & 4PL healthcare distribution.

• Clinical trial logistics.

• Secondary packaging.

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• Specialised programs.

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AUSTRALIAN GOVERNMENT POLICIES

Proactive engagement with the Australian Government on key policies impacting wholesale distribution of medicines

Community Service Obligation

Special Price Access

• CSO Deed expires December 2018.

• Government considering options to ensure adherence to National Medicines Policy standards.

• National Pharmaceutical Services Association continues to lobby Government.

• Government seeking to reduce net funding of high cost drugs.

• Various alternatives have been scoped with the Pharmacy Guild, Medicines Australia and the NPSA.

• Model has not yet been agreed.

• Wholesalers will seek Government funding should additional costs be imposed.

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HEALTHCARE STRATEGIC PRIORITIES

• Continue to drive efficiencies through cost leadership in a competitive environment.

• Bed down Chemist Warehouse.

• Grow Healthcare Logistics in Australia.

• Increase retail presence through TerryWhite Chemmart, Ventura and other management company investments.

• sector.

• Pursue acquisition opportunities in the medical consumables

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Consumer Brands Sean Duggan, CEO Animal Care & Consumer Brands

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BUSINESS OVERVIEW

Business ENDEAVOUR CONSUMER HEALTH Key Products & Brands Brands and Service Offering

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ANIMAL CARE
Products & Brands
Australia Wholesale Distribution
New Zealand Retail
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CONSUMER BRANDS ROLE WITHIN EBOS

 Attractive earnings

• Higher gross margin & EBIT%

Brands play a key role within our markets

• Higher growth potential

• Strong ROCE

 Diversified earnings in a less t regulated environmen

• Consistent, reliable growth

We are deeply passionate about helping people through our brands and helping our people to reach their full potential

We can be the best in the world at delivering trusted brands built on sincere belief

Profit per brand drives our economic engine

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CONSUMER BRANDS LEADERSHIP TEAM

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CEO
Sean Duggan
EGM
IS/IT Manager EGM EGM
Commercial Director
Australasia Endeavour Consumer EBOS Asia Wholesale
Health
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OUR CORE COMPETENCIES

 Leading teams of engaged employees passionate about our brands & categories

 Belief based Brand building

 Supply chain & logistics, leveraged off our broader network

• Vendor management & sourcing

• Quality control and quality assurance

 Sales across FMCG & specialty environments

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PET INDUSTRY – ANZ

ANZ pet sector is worth ~$14 billion and is growing at an estimated 2% to 3% per annum¹

ANZ Pet Market by segment

• Market growth driven by trends towards:

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Pet
Products
Other
Services
Pet Food
Veterinary
Services
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• humanisation of pets;

• premiumisation of pet food and products; and

• outsourcing of services like grooming, training and obedience and dog washing.

• Australian 5 year forecast sales growth rates per annum:

• Pet retailers: 3.2%², with premium food growing at faster rates.

• Online pet food and pet products: 7.8%[3] .

• Veterinary services: 2.6%[4] .

Sources: 1 – Management estimate based on industry reports. 2 – IBISWorld industry reports Pets and Pet Supplies Retailers in Australia, February 2018. 3 – IBISWorld Online Pet Food and Pet Supply Sales in Australia, May 2018. 4 – IBISWorld Veterinary Services

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CONSUMER HEALTH & WELLBEING - ANZ

The Consumer Health & Wellbeing market across Australia and NZ is significant and highly fragmented across multiple product categories

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Total Consumer Health & Wellbeing markets
Australia ¹ New Zealand ²
$17.4b $1.28b
Grocery Pharmacy Grocery Pharmacy
$13.2b $4.2b $900m $383m
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EBOS has focussed on developing our own brands in the following sub-categories :

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Vitamins, Minerals
³
& Supplements $4.9b $262m
⁴ $273m (total) $80m (total)
Toothpaste
$7m (natural) $7.3m (natural)
Specialty Tea ⁴ $104m $32m
Liniments ⁴ $84m $17m
OTC Medicines ⁵ $2.5b
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EBOS brands

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1 Management estimate from extrapolation of data from IBIS World reports -Supermarkets & Grocery in Australia (Oct-18) & Pharmacies in Australia Industry Report (Sep-18). 2 NZ data from IRI market data , 3 AU Data from CMA Annual Report 2018, NZ based on IRI market data , 4 Management estimates based Neilsen and Aztec scan data , 5 Management estimate based on IBIS World Report - Pharmacies in Australia Industry Report (Sep-18)

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BLACK HAWK GROWTH

Black Hawk Sales (pre and post acquisition)

• Australia’s fastest growing premium pet food brand over the last four years, now with a leading position in the pet specialty retail channel.

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23%
48%
55%
23%
FY14 FY15 FY16 FY17 FY18
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• Range & brand extension

• Investment in marketing driving increased brand awareness and retail support.

• In July 2017, Black Hawk was launched in the New Zealand market and has exceeded our expectations.

• Growing presence in Asian markets.

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VITAPET – CONSISTENT GROWTH

• Vitapet has an extensive range of pet treats in both Grocery and Pet Specialty

Vitapet sales growth last 5 Years

• Vitapet has built very strong market positions in both Australia and New Zealand due to:

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5%
7% 7%
8%
Vitapet NZ Grocery market share¹ Vitapet AU Grocery market share¹
VitaPet
Others 23%
27%
VitaPet
Others
63%
77%
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• an extensive and growing product range

• products having quality ingredients that are loved by pets; and

• the humanisation of pets driving premiumisation and an increased spend per pet.

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Vitapet NZ Grocery market share¹ Vitapet AU Grocery market share¹

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¹ MAT Data - Aztec Scan data period ended 14/10/18

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RED SEAL IN NEW ZEALAND

Strong market share in New Zealand supermarkets across key categories ¹

Vitamins - Grocery

Specialty Teas - Grocery

Natural Toothpaste - Grocery

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Red Seal Red Seal
Red Seal
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¹ Data based on IRI scanned sales market share data Aug-18.

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ASIA – CONSUMER BRANDS OPPORTUNITY

• Asia, especially China, wants brands that are trusted and successful in our own home markets

 The important role of brands in our categories are just as relevant in Asia

 Viewed as an important ‘third leg’ of growth for EBOS

Our Asian strategy:

• Tailored for each brand and market

• Establish a physical presence in China

• Speed up responsiveness to market needs

• Localise offering & execution

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CHINA’S PET FOOD MARKET

A growing export opportunity

• China’s Pet Food market is growing at >30% pa.

• Households owning a pet in China is ~5% vs Australia & NZ ~60%

China Pet Food Market overview & 5 Year Forecast

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50,000 45% 50%
44,851
45,000 45%
40,000 37% 40%
36,743
33% 33%
35,000 35%
30% 29,875
30,000 27% 27% 30%
25%
23%
25,000 22% 25%
18,956
20,000 23,984 20%
14,591
15,000 15%
10,968
10,000 8,009 10%
5,507
4,137
5,000 5%
0 0%
2014 2015 2016 2017 2018 2019F 2020F 2021F 2022F 2023F
Dog&Cat food Retail Value in RMB Million (LHS) Market Annual Growth rate % (RHS)
(Chinese RMB - million) Annual Growth rate %
Chinese Dog & Cat Retail Food market
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Source: Euromonitor International Pet Care in China May 2018

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SUMMARY - CONSUMER BRANDS

Our role within the wider EBOS group is to deliver enduring profitable growth

Future opportunities are strong:

 Build out existing brands & markets

 Continued Asian expansion

 Acquire new ‘seed’ brands to take advantage of our existing infrastructure

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Financial Overview Shaun Hughes, EBOS Group CFO

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CAPITAL ALLOCATION

Proven record in delivering superior returns from investment in existing businesses whilst leveraging financial strength & cash flow generation to invest in adjacent & new opportunities

1

Portfolio of strong Trans-tasman businesses with good momentum and cash generation

2

Leveraging financial strength to invest in adjacent & new business opportunities

• Opportunities to invest & drive continued growth in existing portfolio of businesses with leading market positions

• Capital & resources available to support divisional strategy & execution

• Established capabilities to evaluate & execute M&A opportunities for long-term growth

• Framework to encourage new business initiatives and leverage existing assets

• Good balance between Divisional autonomy and Corporate support

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Strict criteria & financial discipline applied to all investment decisions

Strong commercial capabilities across Corporate office & divisions

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SHAREHOLDER DISTRBUTIONS

Delivering long-term returns to shareholders

• We believe we have the right balance between shareholder distributions and retaining sufficient funds for further investment.

• Target dividend pay-out ratio is between 60-70% of Net Profit After Tax (NPAT).

• Dividends are 100% franked for Australian resident shareholders.

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Dividends Per Share (NZ$ cents)
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H1 H2
35.5
33.0
32.5
25.0
20.5
33.0
30.0
26.0
20.5 22.0
FY14 FY15 FY16 FY17 FY18
Underlying Earnings Per Share (NZ$ cents)
98.5
91.3
84.0
62.8 70.8
FY14 FY15 FY16 FY17 FY18
Cents per share
Cents per share
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BALANCE SHEET & DEBT MANAGEMENT

Strong balance sheet

• Average maturity of term debt & securitisation facilities of 3.4 years at 30 June 2018.

• Focus on maintaining ROCE above 15.0%.

Net Financial debt of NZ$471m (A$432m) at 30 June 2018 (Gearing 1.74x)

• Recent acquisition of Warner & Webster and Terry White investment will modestly increase gearing in 1H FY19.

• Inventory build expected to start Q4 FY19 (in relation to CWG) of approximately $100m.

Debt Maturity Profile – current facility limits (A$m)

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400
293
161
64 50
-
FY19 FY20 FY21 FY22 FY23
Cash advance facility Term debt facilities Securitisation
Return on Capital Employed
16.4% 16.4%
15.8%
13.7%
12.8%
FY14 FY15 FY16 FY17 FY18
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Return on Capital Employed

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FINANCIAL AND CAPITAL CONSIDERATIONS

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• Focus on maintaining our:

• Industry leading cash conversion cycle (Cash conversion days: 15 at Jun-18).

• Strong credit disciplines balance sales and credit risk.

• Disciplined capital allocation approach.

• Strong balance sheet with capacity for acquisition opportunities.

• ROCE >15%.

• Acquisition and internal investments to be earnings accretive and deliver acceptable returns on capital employed.

• Deliver returns to shareholders.

5 Year Underlying EBITDA (NZ$m)

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FY18 272.4
FY17 241.4
5 Year
CAGR
FY16 225.5
+11.6%
FY15 196.7
FY14 175.4
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Positioned for Future Growth John Cullity, EBOS Group CEO

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STRATEGIC FOCUS AREAS FOR GROWTH

 Continue to execute on both organic growth and strategic value accretive acquisitions.

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• Leverage our position as the lowest cost wholesaler / distributor.

• Expand our presence in community pharmacy.

• Build and acquire brands that consumers value.

• Expand our brands into Asian markets.

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40

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Site Tour – New Brisbane Facility OHS Bus departing at 11.15am, returning to the Stamford at 1.00pm.

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