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nemo2014\Presentations\Analyst Presentation Jan14\201401 Nemo Analyst Presentation Master-22nd Jan FINAL.pptx

FY14 Preliminary Results

Year ended 27th March 2014

1


Forward looking statements

Forward-Looking Statements

INCLUDED IN THIS PRESENTATION ARE FORWARD-LOOKING MANAGEMENT

COMMENTS AND OTHER STATEMENTS THAT REFLECT MANAGEMENT’S CURRENT

OUTLOOK FOR FUTURE PERIODS

These expectations are based on currently available competitive, financial, and economic

data along with our current operating plans and are subject to risks and uncertainties that

could cause actual results to differ materially from the results contemplated by the forward-

looking statements.

The forward-looking statements in this presentation should be read in conjunction with the

risks and uncertainties discussed in the Pets At Home Annual Report and Accounts.

2


Highlights

3 3


Strong services rollout and EBITDA margin expansion

Performance in line with expectations at IPO

Revenues grew 11.2% to £665.4m, like-for-like growth of 2.4%

Underlying EBITDA of £110.7m & margin expansion of 17bps to 16.6%

Strong rollout of stores and biggest year of services expansion

Now the largest small animal veterinary services provider in the UK

VIP Club reached 2 million members

4


Financials

5 5


£91.2m

£98.5m

£110.7m

FY12 FY13 FY14

£544.3m

£598.3m

£665.4m

FY12 FY13 FY14

A track record of top line and like-for-like for growth, with high

cash returns on investment

Underlying Unlevered Free Cash Flow & Conversion

Revenue & Like-For-Like Growth

1.4% 2.6% 2.4%

86% 98% 84%

16.8% 16.5% 16.6%

Underlying EBITDA & Margin

£78.6m

£96.8m

£92.4m

FY12 FY13 FY14

CROIC

CROIC excludes goodwill on KKR acquisition. FY14: excludes £25m of

payables related to outstanding IPO costs at year end. FY13: software and

other intangible assets have been reduced by £45.6m of goodwill associated

with the acquisition of Vets4Pets which was acquired at the end of FY13 and

hence FY13 includes no trading results from that acquisition

21.7% 22.6%

FY13 FY14

6


Strong revenue growth across all categories

Revenue £m FY13 FY14 Change

Food £297.9 £327.1 9.8%

Accessories £268.5 £288.0 7.3%

Total Merchandise £566.4 £615.1 8.6%

Services & other1 £31.9 £50.3 57.4%

Total Group revenue £598.3 £665.4 11.2%

Like-For-Like growth2 2.6% 2.4%

1 Includes revenue from Joint Venture and wholly owned Group Venture vet practices, Groom Rooms, live pet sales & insurance commission

2 Total revenue in the financial period compared to revenue achieved in the prior period for stores, grooming salons & vets trading for 52 weeks. Includes omnichannel.

7


53.8%

0.1% 0.4%

FY13A Merchandise Services & Other FY14A

54.1%

Segment margins have improved, overall gross margin has

contracted due to mix

Gross Margin Bridge

FY13 FY14 Change

Merchandise Services Merchandise Services Merchandise Services

Revenue Mix 94.7% 5.3% 92.4% 7.6% -222 bps +222 bps

Gross Margin 56.0% 22.5% 56.1% 26.3% +14 bps +386 bps

Includes:

Terms

Global sourcing, Asia

Advanced Nutrition

Own brand

Food mix vs Accessories

Includes:

Growth in Vets Group

Maturing Vet JVs

Vets4Pets synergies

Wholly owned GV vets

Newer Groom Rooms

Pet welfare

8


EBITDA margin reflects significant investment in colleagues,

stores and distribution

EBITDA Margin Bridge

9

16.6% 16.5%

0.3%

0.2%

Includes:

Vets integration

ssss efficiencies

Includes:

Vets growth

New stores

VIP / marketing

Auto- enrolment


Underlying to reported EBITDA reconciliation

£000 FY14

Operating profit £78,842

Exceptional items £10,574

Related party fees £1,221

IFRS2 share based payment charges £31

Underlying operating profit £90,668

Depreciation and amortisation £19,990

Underlying EBITDA £110,658

FY14 excludes

Exceptional items: costs associated with the Initial Public Offering on 17 March 2014 (£9.4m), and costs

associated with the integration of the Vets4Pets business (£2.3m) net of a VAT refund (£1.1m)

Related party fees

Costs commensurate with operating the business as a publicly quoted company

IFRS2 related share based payment credits and charges

FY15 onwards

Excludes IFRS2 related share based payment credits and charges & any exceptional items

Includes Plc costs of c£2.5m

10


Pre-tax cash flow conversion strong, despite increased capital

expenditure

WC Movement, £m FY13 FY14

Increase in inventories (1.7) (4.0)

Increase in trade & other

receivables (6.0) (8.0)

Increase in trade and other

payables 27.0 21.7

Net working capital

movement 19.3 9.7

Working Capital, £m5 FY13 FY14

Inventories 42.1 46.1

Trade & other receivables 34.0 42.0

Trade & other payables4 (99.8) (121.5)

Working capital (23.7) (33.4)

Cashflow, £m FY13 FY14

Underlying EBITDA 98.5 110.7

Working capital change 19.3 9.7

Underlying operating cashflow 117.8 120.4

Capital expenditure (20.4) (26.3)

Investments (1.2) (1.7)

Other 0.6 0

Pre-tax cash before exceptionals 96.8 92.4

Conversion % 98% 84%

Exceptional items1 (7.3) (1.2)

Pre-tax cash available for debt

service 89.5 91.2

Acquisitions2 (47.9)2,3 (2.0)

Pre-tax, post acquisitions cash

available for tax, debt service 41.6 89.2

1 Exceptionals includes related party fees, costs commensurate with operating the business as a publicly quoted company and IFRS2 related share based payment credits and charges. Excludes out standing payments

associated with IPO costs 2 Excludes costs of acquisition (£4.6m), which are included in exceptionals in 2013 Actual 3 Acquisitions are net of cash acquired 4 FY14 excludes £25.2m in other payables, reflecting out standing payments associated with IPO costs 5The "trade and other receivables" and "trade and other payables" balances presented have been adjusted to reflect movements in the fair value of financial instruments which are held as assets or liabilities on the

balance sheet, in accordance with their presentation within the Statement of Cash Flows. The “trade and other payables” balances presented in the above table have been adjusted to exclude exceptional movements in

working capital relating to accrued transaction costs, in accordance with the presentation of such items within the Statement of Cash Flows.

11


Capital expenditure driven by new stores and refurbishments

Capital investment programmes fully funded out of

operating cash flow

FY14 capital expenditure reflective of

32 new store openings at a cost of £10.9m

Major refurbishment capital of £5.1m to facilitate Vet /

Groom Room additions in 20 stores

New services rollout

Introduction of SAP

We remain well funded to execute our growth and

rollout strategy

Capital Expenditure

£m FY13 FY14

New stores 10.7 10.9

Services 2.7 5.1

Major projects 2.7 4.0

Other capex 5.9 10.0

Total capex 22.0 30.0

CROIC 22.6% 21.7%

12


Robust balance sheet and 2.3x Net Debt / Underlying EBITDA

£m

Stated Gross Debt 319.9

Add back: issue costs 5.1

Adjusted Gross Debt 325.0

Cash 90.8

Less IPO related cash (24.9)

Adjusted cash 65.9

Net Debt 259.1

Underlying EBITDA 110.7

Leverage 2.34x

Underlying Net Debt position adjusted for

a timing difference in IPO and Plc related

costs due to be paid from IPO cash

proceeds

Leverage reconciliation

13


Another year of revenue and Like-For-Like growth

Investments for future growth: both opex & capex

Significant maturation still to flow through new stores, veterinary practices & Groom Rooms

Services expansion underpins gross margin and EBITDA margin accretion opportunity

Diligent cash management supports strong cash conversion dynamics

Strong performance during the year and well positioned for further

growth

14


Strategic update

15 15


377 Stores, 277 Vets, 129 Groom Rooms

The UK's leading specialist retailer of pet food, accessories,

pet-related products and services

Stores

c. 8500 sq ft

In-Store

Services

Standalone

Services

5 Flagship

117 Standalone Vet Practices

2 Standalone Vet + Groomers

321 Superstores

158 Vets in stores

127 Groomers in stores

50 Small Superstores

Clear leader & specialist retailer in the resilient £5.4bn UK pet care market*

1 New Format (Barkers)

Core customer is the engaged, multi-pet owner

• *Source: OC&C

16


Our Strategy: Delivering across the PawPrint allows us to drive

growth in Like-For-Like, space and gross margin

Product and

Innovation

Product Mix & Own

Brand

Optimised Store &

Pet Services Roll

Out

Key Growth Drivers

Dri

vers

of

Co

re G

row

th

LFL

Space

Gross Margin

VIP Club

Omnichannel

Services (Vets &

Groomers)

Engagement

Services Maturity

17


Driving LFL growth through a differentiated proposition

Optimised Store & Pet Services Roll Out

Product Mix & Own Brand

Key Growth Drivers

LFL Growth

Space Growth

Gross Margin

Growth

Product and Innovation

Omnichannel

Services (Vets & Groomers)

VIP Club

Engagement

Services Maturity

18


Differentiated and unique product is critical to our strategy:

driving customer loyalty & visit frequency

>2,750 SKUs launched in FY14,

refreshing 1/3 of our product range

In-house expertise to design and brand

products

Product & Innovation

Own/private label products

42% gross store revenues

Successful exclusive products launches,

such as Smart Bones

2012 2014

2013

Own / private brands Exclusives

19


Differentiated and unique product is critical to our strategy:

driving customer loyalty & visit frequency


Advanced Nutrition 56% of dog & cat food

sales excl. treats (FY13: 53%)

AN market forecast to grow ahead of

the pet food market

Pets At Home Advanced Nutrition revenues

Reported growth 18%

LFL growth 13%

Sales of private label AN brand, Wainwright’s

dog food, grew 26.7% to £27.2m

New launches of dog Grain Free

and Wainwright’s cat

£105.3

£124.0

FY13 FY14

20


54%40%

54%75% 79%

28%53%

15%

12%9%

12%6%

22%

33%12%

14%12%

6% 4%

24%

12%19%35% 24%

7% 11%26%

Overall Food Treats Small Accessories Large Accessories Health & Hygiene Other

Unique To PAH Overlap With One Other Retailer Overlap With Two Retailers Overlap With Three Or More Retailers

1%

Over 50% of SKUs unique to Pets at Home – with a highly

differentiated range in accessories

Source: Compability Online Store Checks, OC&C analysis 1 Top 4,000 Pets at Home SKUs, by sales volume, identifiable on Pets at Home website, compared to other retailers 2 Competitors: Amazon (Includes Amazon and Amazon Marketplace), Tesco.com, Zooplus, Medicanimal, Fetch.com

Range Overlap Analysis vs. Amazon, Tesco.com, Zooplus, Medicanimal, Fetch.com

Proportion of Overlapping SKUs1 With Pets at Home2

% Overlap

vs. Amazon vs. Fetch.com vs. Medicanimal vs. Zooplus vs. Tesco.com Overall

Based on the top 4,000 identifiable SKUs (by sales volume) on the Pets at Home website which account for 80.9% of gross sales

Percentage of Unique SKUs – Pets at Home vs. Amazon, Tesco.com, Zooplus, Medicanimal, Fetch.com

59%

50%

59%

76%

79%

29%

54%

Overall

Food

Treats

SmallAccessories

LargeAccessories

Health &Hygiene

Other

75%

57%

73%

91%

87%

62%

89%

84%

72%

93%

92%

88%

67%

99%

89%

76%

82%

97%

95%

96%

98%

89%

80%

73%

99%

98%

92%

97%

54%

40%

54%

75%

79%

28%

53%


21


VIP Club has grown at a rapid rate

VIP Club

Membership and revenue capture rapidly growing1 VIP Club Card, launched November 2012

Allows us to deliver targeted marketing

communications to owners & their pets

7 million pets registered by owners

Every swipe awards lifelines, which convert to

charity donations >£1m raised FY14

My VIP magazine has an estimated readership

of >1.1 million, c£100 of vouchers in each issue

Voted ‘Best Loyalty Programme’ in retail by the

Loyalty Awards 2014 VIP Customer Basket Size2

1 Pets at Home VIP data to the 27th March 2014, extracted by GI Systems 2 Average basket sizes for VIP & Non VIP Customers in FY14

£15.60

£21.89

Avg Basket Size Non VIP Customer

Avg Basket Size VIP Customer

+40%

0.2

0.7

1.2

1.6

2.0

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

-

0.5

1.0

1.5

2.0

2.5

Jan 13 Apr 13 Aug 13 Dec 13 Mar 14

Members (m) % Revenue Captured

22


VIP allows us to increase share of wallet through targeted and

personal communications

Wainwright’s Cat launch email to VIP Club members

Targeted at cat owning VIP members, particularly those

purchasing Wainwright’s Dog food

55% of first month sales from VIP members

Dog bedding email to VIP Club members

Targeted at 194,000 members with senior pets

Included 10 targeted offers (30% off key food brands)

Overall redemption 12%

23

VIP Club


Source: 2012 Consumer Survey of >5,000 Respondents, OC&C analysis

Note: All figures exclude VAT

VIP will allow us to pursue a >£1.5bn wallet share opportunity

with current customers

Calendar Year 2012

£3,252m

£1,530m

£630m

Total=

£5,412m

Total Spend

60%

28%

12%

%

Annual Spend in Market, ex VAT

Spend at Pets at Home by Customers Spend at Other by Pets at Home Customers Non Pets at Home Customer Spend

Strategic

Initiatives

Cross Sell

Services

Increase Share

of High Margin

Own Label

Leverage VIP

Data with

Suppliers

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Advanced

Nutr

itio

n

Oth

er

Food

Accessories

Vet S

erv

ices

Insura

nce

Gro

om

ing

£209m £1,963m £779m £1,603m £676m £182m

44%

14%

41%

9%

24%

67%

32%

18%

49%

6%

34%

60%

1%

40%

60%

3%

42%

55%

VIP Club

24


Econometric research suggests that every 16 visits to our website drives 1 in-store customer transaction2

The highest traffic pet website in the UK

Omnichannel

Market share of UK pet retail traffic 1

Source: Hitwise 1 Data represents week average from 16 May 2014

2 Based on econometric research undertaken for the company

Other

Visitors to our site versus competitors

47%

12% 12% 11%

7%

3% 3% 5%

25

Mar 13

Apr 13

May 13

Jun 13

Jul 13

Aug 13

Sep 13

Oct 13

Nov 13

Dec 13

Jan 14

Feb 14

Mar 14

Apr 14

www.petsathome.co.uk www.pet-supermarket.co.uk

www.petplanet.co.uk www.zooplus.co.uk

Amazon UK - Pet Supplies


4 clicks to checkout (as Amazon)

More than 8,100 SKUs (higher than stores)

Click & Collect sales maintained, a lever to drive footfall

to stores

Subscription food service in trial

Our website is a portal for customer engagement, driving footfall

to stores & services

New website launched January 2014 Developments to come

Omnichannel

Optimise

Full mobile & tablet friendly

versions

Targeting 10,000 SKUs

Integration with

stores

Rollout of Deliver To Store

Continue to drive Click &

Collect

Redemption of VIP vouchers

26


Now the largest small animal veterinary services

provider in the UK

Successful integration of Vets4Pets during the year

18 retrofits to stores in FY14

Largest grooming provider in highly fragmented UK market

11 retrofits to stores in FY14


Services increase overall

customer spend & loyalty

In store services provide a one stop,

convenient offer for pet lovers

Retrofitting services drives

footfall & lifts store LFLs by c1%

27


VIP allows us to drive increased spend on services as well as

increased spend in store

1 VIP club member spend for the FY14 2 Vets consist of Companion Care practices 3 Accounts for total transactions including online

Visit

Frequency3 5.9 10.3 10.0 12.7 18.7

Services

28

# of People

in Sample 1,580,716 47,589 36,112 122,560 4,040

19.5

9,417

191 231 160 231266

412135

250

322362

513

643

871

Store Only Store +Groomer

Store + Online Store + Vet² Store + Vet²+ Groomer

Store + Vet²+ Online

Store + Vet²+ Groomer+ Online

Store Other

Additional customer

spend

Last 12 Month VIP Club Member Spend (£)

30.2

329


Colleague & customer engagement is central to our success

Trained and Experience Colleagues

4 step training; enhanced salaries for qualified colleagues

Step 1

Step 3 Step 4

Step 2

High Colleague Engagement and Retention

Outrageous Customer Service

Engagement Retention

Pawsitively

outrageous

service

Expertise

Selling

through

expertis

e Resulting in Higher Basket Size1

Friendliness Knowledge

91%

93% 93%

83% 83%

81%

FY12 FY13 FY14

Engagement Retention

Fish4Opinion Net Promoter Score

77%

84% 84%

FY12 FY13 FY14

£20.64

£22.00

Less than satisfied Highly satisfied

1 Data from FY14 prepared by SMG

£21.01

£22.04

Less than satisfied Highly satisfied

5% 7%

29

Engagement


Accelerating growth through adding new space


Key Growth Drivers

LFL Growth

Space Growth


Omnichannel


VIP Club

Engagement


Gross Margin

Growth

Services Maturity

30


313

345

377

FY12 FY13 FY14

Consistent store rollout, adding new high street format Barkers

Optimise Store Roll Out (incl. Vets and Groomers)

+32

Includes

Barkers

+32

+32

31


87 111 158

5

97

119

FY12 FY13 FY14

In-store Standalone

Record year for organic services rollout

Optimise Store Roll Out (incl. Vets and Groomers)

Largest branded small animal veterinary services provider Largest grooming salon operator in the UK

Stores with Vet Stores with Groom Room

FY12 28% 19%

FY13 32% 25%

FY14 42% 34%

61

87

129

FY12 FY13 FY14

+18

+26

+42

+19

+116

+69

92 Vets4Pets

acquisition

32


Significant opportunity for expansion – maturity & penetration of

vets and groomers is low

Source: CACI, Pets at Home. Existing store/practice numbers as at 27 March 2014 1 Includes 2 standalone vet + groomers 2 Proforma for Vets4Pets acquisition

Current Total

Potential Portfolio

% Existing Opened

Since 2010

Years to

Maturity

121¹

110¹

140

371

121

198

>58

>140

>112

>129

Groomers

Standalone Vet

In-store Vet

Stores >500

>450

>250

>300

4-5

7

7

4-5

30%

59%

60%2

73%

1

1 129

119

158

377

117

192

54

131

100

123

Groom Room

Standalone Vet

In-store Vet

Stores

Existing Potential Retrofits Potential New

c30%

c64%

c64%2

75%

33


Improving profitability through expanding gross margin


Key Growth Drivers

LFL Growth

Space Growth


VIP Club

Omnichannel


Engagement


Gross Margin

Growth

Services Maturity

34


Higher margin Advanced Nutrition and private brands are key

contributors

Product Mix / Own Brand

Private brand / own labels as % gross store food revenues

Advanced Nutrition penetration of dog & cat food revenues Private brand / own labels are 42% of gross store revenues

Private brand / own labels as % gross store accessories revenues

32.9%

67.1%

Own label & private brand Other

49.9%

50.1%

Own label & private brand Other

Wainwrights Dog Advanced Nutrition private brand sales

35

£15.8m £19.9m

£5.7m

£7.3m

26.5%

28.3%

25.5%

26.0%

26.5%

27.0%

27.5%

28.0%

28.5%

£0.0

£5.0

£10.0

£15.0

£20.0

£25.0

£30.0

FY 13 FY 14

Wainwrights Dry Dog Wainwrights Wet Dog

W/W participation of dog AN

53% 56%

47% 44%

FY 13 FY 14 Other Dog and Cat Food (exc Treats) Advanced Nutrition


£40,000

£50,000

£60,000

£70,000

£80,000

£90,000

£100,000

£110,000

£120,000

£130,000

£140,000

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8

Average fee income to PAH

Increasing margin leverage as vet practices and Groom Rooms

mature

Groom Room economics located in-store

c75% of grooming portfolio open since 2010

Vet practice economics located in-store

c64% of vet portfolio open since 2010

£73,000

£83,000

£106,000

£0

£7,000

£18,000

FY12 FY13 FY14

Average Sales Average EBITDA

Cohort of 8 Groom Rooms opened in FY12

Mixed historical cohort of 8 Companion Care practices

For every 60 practices added, we incur an additional c£1.3m

increase in central support costs

36

c64% practices

less than 4 yrs old


FY14 performance summary: strong services rollout and EBITDA

margin expansion

Performance in line with expectations at IPO

Revenues grew 11.2% to £665.4m, like-for-like of 2.4%

Underlying EBITDA of £110.7m & margin expansion of 17bps to 16.6%

Strong rollout of stores and biggest year of services expansion

Now the largest small animal vet services provider in the UK

VIP Club reached 2 million members

37


Outlook

38 38


Confident in the future prospects of the Group

Guidance

We remain comfortable with market expectations

Pet market outlook and economic indicators positive - lack of sustained rise in disposable incomes gives some caution

Trading in the current financial year is progressing in line with our expectations

Store and services rollout per annum, more than …

25 stores

60 vet practices (c30 retrofits)

50 Groom Rooms (c35 retrofits)

Gross margin mix: Benefit from services maturation & growth, modest Merchandise margin expansion

Plc costs of c£2.5m

Capital expenditure: £34-35m per annum

Net interest cost: c3.0%

FY15E tax rate 22% (+1% to underlying tax rate)

FY15E leverage: c2.0x underlying EBITDA, decreasing by 0.5x per annum thereafter

Dividend: FY15E 30-40% payout ratio, split 1/3 interim, 2/3 final

39


Appendix

40 40


Financial definitions

Like-for-like

‘Total sales revenue in a financial period compared to revenue achieved in a prior period for stores, grooming

salons and vets that have been trading for 52 weeks. Includes revenue from the Group’s online store.

Underlying EBITDA

Group underlying operating profit under IFRS (which includes amortisation of landlord and developer

contributions received), plus depreciation and amortisation, and profits and losses on disposal where these are

included in operating profit. Excludes exceptional items, related party fees, costs commensurate with operating

the business as a publicly quoted company and IFRS2 related share based payment credits and charges

Underlying unleveraged free cash flow

Underlying EBITDA, adjusted for changes in working capital, acquisitions of property, plant and equipment and

other intangible assets, investments in other financial assets, proceeds from the sale of property, plant and

equipment and is stated before cash flows for exceptional costs and acquisitions of subsidiaries. FY14 FCF has

been adjusted through the removal of a £25.2m increase in other payments reflecting payables associated with

IPO costs outstanding at year end to give an underlying unlevered FCF

CROIC

Represents cash returns divided by the average of gross capital (GCI) invested for the current financial year and

GCI for the prior financial year. Cash returns represent underlying EBITDA less depreciation & amortisation,

plus rental charges, reduced by tax equivalent to the corporate tax rate, plus depreciation and amortisation. GCI

represents Gross Property, Plant and Equipment plus Software and other intangibles excluding the goodwill

created on the acquisition of the group by KKR (£906,445,000) plus net working capital plus rent multiplied by a

factor to impute the commitment of the group to its rental obligation. A multiple of 8 has been used.

41


277 256

101 71

53 49 82

56

47

22

20

377

227

Pets at Home is the largest specialist pet care retailer and small

animal veterinary Group

Source: Company websites. Store/practice numbers as at end March-2014

#1 Specialist Pet Care Retailer #1 Branded Small Animal Veterinary Group

Vet Group

Market Position

42


UK pet market is large, resilient and growing across all

categories

Source: OC&C

Note: All figures to calendar year end and exclude VAT 1 ONS data defined as all retailing including automotive fuel

Large and highly fragmented

addressable market £5.4bn

Positive year on year market

growth since 2008 delivering

a CAGR of 2.6%

Future growth driven by

humanisation,

premiumisation and

increased uptake of services

Services represent ~50% of

the market

UK Pet Care Market

Treats

Vet

Services

Health &

Hygiene

Other

Accessories

Grooming

Insurance

Other Food

Advanced

Nutrition

Total

0.8%

7.7%

9.5%

0.3%

1.4%

3.3%

8.0%

2.6%

2.6%

2008-12

CAGR

3.1%

7.7%

5.3%

2.5%

3.2%

4.1%

9.3%

2.6%

2012-17

4.3%

5.1%

2.6%

3.9%

Total

Services

Total

Accessories

Total

Food

3.1%

1.3%

2.4%

2012-17 2008-12

CAGR

UK Retail1: 2.2%

1.5 1.5 1.6 1.6 1.6 1.7 1.7 1.8 1.9

0.1 0.10.2 0.2 0.2 0.2 0.2 0.2

0.3

0.2 0.2 0.2 0.3 0.3 0.3 0.30.3

0.4

0.3 0.30.3 0.3 0.3 0.3 0.3

0.3

0.4

0.4 0.40.4 0.5 0.4 0.4 0.4

0.4

0.51.41.4

1.5 1.5 1.6 1.6 1.61.7

1.9

0.20.2

0.2 0.2 0.20.2 0.2

0.2

0.2

0.40.4

0.5 0.5 0.60.6

0.70.7

1.1

£4.4bn£4.6bn

£4.9bn£5.0bn £5.1bn

£5.3bn£5.4bn

£5.7bn

£6.7bn

2006 2007 2008 2009 2010 2011 2012 2013F 2017F

Projection

+4.3%

2.6%

5.2%

Market Position

43


We are gaining share across all segments of the market

UK Pet Care and Vet Market – Share, 2009–121

Source: OC&C

¹ Figures Exclude VAT 2 The 5.9% includes 3.4% from Companion Care and 2.5% from Vets4Pets (inc. Acquisition) – though V4P not acquired by Pets at Home until April 2013 3 Includes: CVS Group, IVC, Medivet Group, Vets Now (No revenue data for Goddards available) – figure is therefore likely higher

Food: Potential to gain further share from

independents & grocers

Vet Services: Potential to gain further share from

independent practices

Accessories: Potential to gain further share from

specialists & independents

Advanced Nutrition: Potential to gain share from

vets and specialists

10.1% 12.6%

74.3% 70.6%

2.8% 4.2%

6.4% 5.8%

1.9% 2.0%4.4% 4.9%

2009 2012

2,017 2,172

Delta2009–12 (ppts)

+0.4

+0.1

-0.6

+1.4

-3.7

+2.4

27.0%32.3%

13.5%

15.9%0.3%

0.5%

30.5%

22.3%

5.7% 9.0%

23.0%19.9%

2009 2012

757 779


-3.1

+3.3

-8.2

+0.2

+5.2

+2.3

38.3%44.4%

16.6%

16.8%

8.3%

8.4%2.4%

2.4%

34.5%28.1%

2009 2012

167 209


-6.4

+0.0

+0.1

+0.2

+6.1

2.0%² 5.9%²

9.5%³

13.3%³

88.5%

80.8%

2009 2012

1,549 1,603


-7.7

+3.9

+3.8

Pets at Home Grocers - Store Grocers - Online Other Pet Specialists Online Specialists Other Private and Small Vet Practices

Market Position

44


4.8%6.5%

2.0%

3.4%1.4%

2.5%

1.5%

2.3%

n/a

1.6%

1.0%

1.4%

0.8%

1.6%

88.5%

80.8%

1,549 1,603

2009 2012

Share gain, ppts

-7.6

+0.8

+0.4

n/a

+0.8

+1.1

+1.4

+1.6CVS²

CompanionCare

Vets4Pets

MedivetLtd

IndependentVetcare²

Vets Now

Goddard

Private Practices& Other SmallClinics

Major chains have been growing rapidly since 2009, Pets at

Home Vet Group has grown fastest

Source: OC&C

Note: All years calendar year end 1 Estimated revenue figures for 2009 and 2012 calendar years 2 Share of CVS and Independent Vetcare overstated – includes some large animal revenue from mixed animal practices

Total Surgeries by Volume of Top Veterinary Chains, 2009–2013 UK Vet Market Share1,2 (£m)

7% 9% 10% 11% 13% Proportion of Total Veterinary

Surgeries

# V4P New

Practices 13 10 11 27

13 19 18 18

168211 223 231

252

53

6685

103

121

48

61

71

82

109

50

60

72

65

7035

71

36

45

45

44

47

355

443

496

560

670

2009 2010 2011 2012 2013

+17%

CVS

CompanionCare

Vets4Pets

Medivet GroupLtd

IndependentVetcare

Goddard

CAGR

2009-2013

+7%

n/a

+9%

+20%

+25%

+11%

Pets at Home acquisition

of Vets4Pets in 2013

Total Pets at

Home share gain

+3.9 ppts (inc

acquisition)

# CCSL New

Practices

Market Position

45


From a small base, the online channel has been gaining share in

pet products by ~1% per annum from 2008 - 2012

Source: OC&C 1 Includes Click & Collect 2 Food & Non-Food

Online Penetration of Pet Products and Selected Retail Categories 20121

7.3%

4.5%

40.0%

20.4%

17.4%

16.8%

15.6%

15.0%

10.5%

6.8%

4.9% Health & Beauty

Home & DIY

Homewares (small)

Baby Home and Travel Equipment

Clothing & Footwear

Sports Nutrition

Contact Lenses

Vitamins & Dietary Supplements

Electronics & Electricals

Total UK Grocery

Total Pet Products

% o

f T

ota

l C

ate

go

ry S

ale

s

Online Penetration of Pet Products1,2, 2008-2012

7.3%6.5%

5.9%5.1%

3.4%

2008 2010 2012 2011 2009

Market Position

46


208236

260280 294 299

8

13

21

34

5487

£216m

£249m

£281m

£314m

£348m

£386m

2012 2013F 2014F 2015F 2016F 2017F

Home Delivery Click & Collect²

CAGR2012-2017

+61.2%

+7.5%

(96%)(95%)

(92%) (89%) (84%)

(23%)

(11%)(8%)

(5%)

(4%)

(16%)

(77%)

+12.3%

2,735 2,832 2,904 2,966 3,045 3,129

216249

281314

348386

£2,951m£3,081m

£3,185m£3,280m

£3,393m£3,515m

2012 2013F 2014F 2015F 2016F 2017F

Offline Online¹

CAGR2012-2017

+3.6%

+12.3%

+2.7%

Online expected to grow more rapidly, click and collect projected

to outpace home delivery

Source: OC&C

Note: Figures exclude VAT 1 Including Click and Collect 2 Includes non store-based Click & Collect

UK Pet Care Pet Products (Food & Accessories) by Channel UK Pet Care Pet Products (Food & Accessories) Online Fulfilment Projection

Projection

Online

Penetration

of Pet

Products

7.3% 8.1% 8.8% 9.6% 10.2% 11.0%

Projection

Market Position

47


Only provider offering a full suite of pet products and services

Grocers Specialists Online Vets

Depth of SKUs in Food

Depth of SKUs in Accessories

Extensive Own Brand Food

and Accessories¹

Advanced Nutrition Category

Leadership

Advice from Trained

Colleagues

Live Pets in Store

Extensive Pet Services (e.g.

vets, grooming, nutrition

consultations)²

Customer Insight /

Membership Programme³

Convenient Proposition

Significant Community

Engagement

Based on searches conducted as of 6 December 2013

¹ Jollyes and Pets Corner have more limited own brand offering

² Certain specialists provide limited services, such as grooming

³ Asda and Morrisons (grocers), MedicAnimal and Ocado (online) and Medivet (Vets) do not have a recognised membership programme

Market Position

48


UK US

Market Size

Market Size 2012 (£bn)1

2008-12 CAGR (%)1

£3.7

3%

£23.2

4%

# Households (m)

% Households with pets

Average # Pets/Household with pet

26

45%

1.9

132

56%

2.1

Spend per Pet food & accessories (£)

Spend/pet food (£)

Spend/pet accessories (£)

£157

£116

£42

£142

£90

£52

Market Structure

(Share of Food & Accessories)

% Grocers

% Pureplay Internet Retailers

% Top Two Pet Specialists2

56%

4%

19%

35%

6%

26%

Consumer Headroom for Growth

% Penetration Advanced Nutrition

% Penetration Organic/Healthy Food

8%

2%

15%

9%

% Grooming Penetration3 4% 10%

Headroom for growth in UK, and a defensible position for Pets at

Home, given US comparison

UK vs US Key Statistics 2012 (Excluding VAT)

Premium food (eg Advanced Nutrition,

Organic, Grain Free, ‘Bridging’ brands)

Accessories range (breadth, depth &

innovation)

Grooming and Day Care services

Opportunities for Pets at Home

Source: OC&C

1 Market Size & CAGR refer to Food (Grocery, AN, Treats), Accessories and Grooming. NB Does not include Vet Services or Insurance 2 Market Share breakdown: Pets at Home (Food: 13%, Accessories: 32%), Jollyes (Food: 0.4%, Accessories: 1.9%), PetSmart (Food: 16%, Accessories: 17% ), PetCo (Food: 9%, Accessories: 10% - NB assumes PetCo has

same Food / Accessories revenue split as PetSmart) 3 Grooming Penetration is defined as the proportion of the dog and cat population groomed in a year

Higher pet penetration

Lower LFL food prices, but more

developed premium food sector

Higher accessproes spend

More developed demand for some

services

Two scale pet specialists with significant

market share (PetSmart & PetCo) –

versus one in UK (Pets at Home)

Key Differences in US

Market Position

49


Our Vet Group Joint Venture model is unique and successful

We make it easy for a Vet to establish their own practice

JV Practice JV Partner benefits

from all profit &

capital accretion

Loan from JV Vet

Partner £30,000

Loan from Pets At

Home £30-60,000

Larger loan from

Bank c£320,000

Enables vet to start up own practice with minimal investment

No need to find full funding alone, or buy into existing Partnership

Removes financing & setup burden

PAH agreement with lending bank for debt facility to open practices

PAH takes care of administration, legal and paperwork

Head start on building reputation & client list

Brand awareness and national advertising

Practice within a store has captive audience & footfall

Brand new practice with state of the art equipment

The model incentivises the Vet to grow

When loans repaid (avg 7 years), vet can take up to 100% dividend

Vet concentrates on what they do best, whilst we take care of back

office support, administration & marketing

Vet has maximum incentive as a result of dividend model

Share structure allows for vet exit strategy and profit from running a

successful business, giving us the opportunity to intervene if necessary

1. Repay bank loan

2. Repay PAH loan

3. Repay Vet

Partner loan

% income to PAH

for admin support

Rent to PAH (in-

store practices only)

Average market

salary to Vet

Partner

JV Practice Cash outflows, Years1-7

Services

50


We have a proven model to identify size of opportunity for

superstores

UK pet care

market potential

has been

calculated by

postcode area

and a demand

map created

Market potential

already

absorbed within

a 10 min drive-

time of existing

stores has been

mapped

Using CACI

models, a

defined payback

hurdle and a

manual sense

check highest

priority new

store locations

have been

identified

Gravity model

simulates

opening of new

stores and

opportunity is

remodelled each

time

Optimise Store Roll Out Plan (incl. Vets and Groomers)

Vet market potential calculated in a similar way

Step 1 Demand

mapped

Step 2 Catchment areas

identified

Step 3 Opportunities

assessed

Step 4 New stores

modelled

51


Source: CACI gravity model

Market potential calculated by

postcode using Acorn demographic

types (darker colour = higher potential)

Blue dot is existing Pets at Home store

Case study of footprint expansion: Basildon example

Optimise Store Roll Out Plan (incl. Vets and Groomers)

CACI analysis demonstrated sufficient demand to justify a second store in Basildon

Basildon Pipps Hill opened in March 2013 and is delivering ahead of business plan

Step 1 Demand mapped

Step 2 Catchment areas identified

Step 3 Opportunities assessed

Market potential within 10 minute drive

time of existing store shown in grey

Unabsorbed market potential remains

in colour

10 minute drive time catchment for

potential new site overlaid

Sufficient demand to justify opening a

second store (purple dot)

52

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